Unilateralism in trade policy undermines the credibility of rules-based multilateral trade frameworks like the WTO. Analyse with reference to recent U.S. tariff actions against its trade partners.

The WTO order rests on two pillars — non-discriminatory Most-Favoured-Nation treatment with bound tariff ceilings, and binding dispute settlement. Recent U.S. "reciprocal" tariffs, set bilaterally rather than through negotiated schedules, weaken both pillars, though the system's decay is not solely of their making.

How unilateralism erodes the framework

• Bypasses bound tariffs: rates are fixed by executive proclamation and bilateral bargaining, not multilateral concession — India's reciprocal rate was set at 18%, with an additional 25% tariff withdrawn in exchange for a commitment on Russian oil purchases [1]. Tariffs thus become instruments of non-trade leverage.
• Invites tit-for-tat retaliation: Canada imposed counter-tariffs of 15%, 25% and 50% on 629 U.S. tariff lines worth C$27.6 billion, effective September 2026 [2]. Escalation outside dispute panels normalises self-help over adjudication.
• Exposes an already weak enforcement arm: the Appellate Body has been unable to hear appeals since its last member's term ended in November 2020 [3]. Unilateralism exploits this vacuum — a losing party can simply appeal "into the void."
• Fragments the system: rules yield to bilateral bargains, where asymmetry of power, not law, decides outcomes.

A calibrated view

• The credibility deficit predates 2025 — stalled Doha talks, proliferating FTAs and the consensus rule had already dulled the WTO's negotiating function.
• Members still litigate, notify measures and use the MPIA workaround, so erosion is partial, not collapse.

Implications for India

• Even deep, decades-old integration offers no immunity, as Canada's experience shows — market-concentration is a strategic vulnerability.
• The Economic Survey 2025-26 accordingly favours embedding resilience within openness through export diversification and deeper value-chain integration rather than reciprocal protectionism [4].

Unilateralism has not destroyed the multilateral order, but it has shifted trade governance from rules toward bargaining power. India's interest lies in restoring a functioning dispute settlement system, widening its trade partnerships, and negotiating from a diversified base — securing strategic autonomy through credible rules rather than concessions.