Title: A Multilateral Trading System in the Wake of US Reciprocal Tariffs: The Multilateralization Dilemma of Bilateral Preferential Treatment and Policy Responses

Author: Wenhua Ji, Aijie Wu

Abstract: This paper examines the impact of the US reciprocal tariff measures under the Trump Administration on the multilateral trading system, and analyzes the dilemma that other economies face when preferential treatment offered bilaterally to the US conflicts with multilateral obligations. Through its opaque bilateral arrangements, the US measures not only violate core WTO disciplines, such as tariff bindings and Most-Favoured-Nation (MFN) treatment, but also amplify uncertainty in international economic relations. Due to unilateral US pressure, most economies have adopted defensive, unilateral responses rather than coordinated collective actions, leaving the WTO’s collective coordination mechanisms largely ineffective. The multilateralization problem arising from bilateral preferential treatment to the US highlights a crucial question: whether Members will reaffirm the universal application of MFN treatment, enhance information sharing and policy transparency, and thus preserve the operational integrity of the multilateral system. Members still have three strategic options for responding to US reciprocal tariffs: maintaining unilateral self-help measures, jointly defending multilateral rules, or seeking advantages through bilateral agreements. Ultimately, this paper concludes that the future authority and effectiveness of the multilateral trading system depend on the willingness of its Members to move beyond short-term self-protection to proactive collective actions.

Keywords: Reciprocal Tariffs, WTO, Most-Favoured-Nation Treatment, Bilateral Preferences