Analysis: Despite multiple trade agreements, more questions persist than answers in the US trade sector
In the ever-evolving world of international trade, a new paradigm is taking shape, one that is reshaping the dynamics of global commerce. This new reality is embodied in the US-laterals, a novel form of trade deals initiated by the United States.
The US introduced "Liberation Day" tariffs on Apr 2, marking the beginning of this new era of US-driven trade deals. The term "US-laterals" has been proposed to describe this new form and substance of trade agreements.
The question for America's trade partners is not about the relevance of the World Trade Organization (WTO), a significant institution for the global trading community for the past three decades. Instead, the focus is on navigating the emerging new reality from the US tariff actions and deal-seeking practices.
The recent US tariff actions are not the primary concern for the global trading community in terms of WTO rules. Rather, the more urgent question is about adapting strategies to this new reality. The US's approach to trade deals, as demonstrated by the introduction of US-laterals, is becoming a significant factor in international trade dynamics.
For instance, the European Union and the United States have engaged in negotiations to address this new reality, aiming for a balanced and reciprocal trade framework. The EU has committed to abolishing duties on industrial goods and allowing limited US agricultural and fishery export quotas, while the US has promised increased investments in the EU and imports of energy products.
These negotiations led to a Joint Declaration in August 2025 and legislative proposals in the EU to implement concessions. However, the final legally binding agreement remains uncertain.
Interestingly, the US federal court ruled in August that President Donald Trump did not have the legal authority to impose tariffs under a US law on emergency economic powers. The administration's appeal regarding the tariffs is now headed to the US Supreme Court.
The new trade deals initiated by the US, or US-laterals, may pose challenges for the global trading community in terms of negotiation and dispute resolution. The shift towards US-laterals could signal a move away from the more common multilateral or plurilateral trade agreements. The traditional methods of international trade negotiations could potentially be impacted by this change.
Despite these challenges, the WTO continues to provide a common, multilateral legal structure for economies to negotiate, dispute, and advance trade issues. The WTO has been a platform for economies to engage in dialogue and find solutions to trade-related problems.
In conclusion, the emergence of US-laterals is shaping a new reality for trade partners. The global trading community is adapting to this new paradigm, engaging in pragmatic responses and negotiations with the US to secure their interests in the ever-changing landscape of international trade.
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