There has been much discussion recently on the apparent death of the “rules-based international order” and most-favoured-nation (MFN) treatment in international trade.

MFN is a core principle of membership in the World Trade Organization (WTO), enshrined as Article 1 of the Marrakesh Agreement that established the WTO. A country with MFN status is required to grant the same trade terms to all its trading partners with MFN status. As a principle, MFN underpins non-discrimination in international trade.

When the United States began in April this year to use its International Emergency Economic Powers Act (IEEPA) to impose duties on top of the MFN tariffs bound under its WTO commitments, the unilateral additions effectively broke the world’s largest economy’s adherence to the MFN principle.

The US breach of MFN gave rise to the interpretation that MFN treatment worldwide and the rules-based multilateral trading system, or “rules-based international order” as an interviewer put it at an Atlantic Council chat with US Trade Representative Jamieson Greer last week, were as good as gone – or only as alive as a Norwegian blue parrot.

To paraphrase Mark Twain, however, reports of MFN’s death are an exaggeration.

Despite its tribulations, MFN remains quite present in the conduct of international trade among trading partners in the rest of the world, and is likely to remain so despite these US actions. But there is cause for concern, and action is necessary to ensure that MFN stays alive and for its benefits to continue to accrue globally.

Why we should care

For all stakeholders involved in trade, it is desirable to keep MFN alive. The simplicity of MFN treatment makes it easier and less costly for firms to engage in trade by making duty rates transparent and predictable and reducing red tape.

It would be very difficult for everyone engaged in global trade if every product had a different duty for every country of origin. The WTO has 166 members. Were MFN truly dead, it would mean that an importer in any of these 166 economies would have to take into account potentially 165 different tariff rates for every import. Instead of the usual two or three columns under each tariff heading that classifies traded merchandise, every country’s tariff schedule would potentially have to have 165 or more columns per heading.

This is particularly important for small businesses, including those that sell on e-commerce platforms such as Etsy or eBay, importers, and consumers. The simplicity also helps governments to efficiently implement trade rules.

When a customs official or importer needs to verify the tariff on a product, they refer first to the Harmonized Tariff Schedule (HTS). The HTS sets out a taxonomy for all merchandise and their corresponding tariffs. Every piece of merchandise typically has two or three different rates of duty: the MFN duty, the non-MFN duty applicable to a handful of countries which do not enjoy MFN status with the importing economy (for the United States, these non-MFN countries are Belarus, Cuba, North Korea, and Russia), and the duty for products from countries that have a free trade agreement (FTA) or preferential trade agreement (generally zero-rated or significantly lower than MFN) with the importing country. A product may also have an anti-dumping or countervailing (AD/CVD) duties applicable to certain exporting countries.

In practice, there are still only three columns in the US tariff schedule. However, since the IEEPA duties were imposed, in addition to a range of other tariffs unilaterally applied over the last eight years by the US under national security and other statutes, additional country-specific duties now apply to each product in the US HTS. If the United States were to reflect in its tariff schedule these country-specific variances, which range from 10% to 50%, quite a few more columns would need to be added.

As of now, the IEEPA duties are neither uniform nor even stable, fluctuating according to geopolitics and fast-moving bilateral negotiations and other developments on the ground.

Yet, notwithstanding current US exceptionalism, most of global trade still operates under MFN conditions in the world outside the US. Other countries have not (yet) sought to follow the US example of setting different tariff rates on a country-specific basis that exceed the tariff ceilings, known as bindings in official terminology, they committed to under the WTO.

MFN is still the baseline global rule

The concept of MFN dates back to the Holy Roman Empire, the European polity that lasted for a millennium until it fell in 1806 during the Napoleonic Wars. The United States first adopted a form of MFN in its 1778 Treaty of Amity and Commerce with France, and implemented the modern iteration of MFN in the aftermath of the First World War.¹ It was in the interwar period when the United States implemented the 1934 Reciprocal Trade Agreements Act (RTAA) in an effort to reverse the harm done to the American economy by the protectionist Smoot-Hawley tariffs of 1930. The RTAA provided for a restoration of MFN and a reduction in US tariffs in exchange for reciprocal reductions from other countries. The United States then advocated for the inclusion of MFN in the foundational principles of the General Agreement on Trade and Tariffs (GATT) in 1947, which became the underlying legal architecture establishing the WTO in 1995.

For more than seven decades, MFN has been the bedrock upon which the rules-based global trading system was built and expanded. Every other trade rule branches out from MFN and its provision of non-discrimination.

MFN is often de facto reflected in implementation of services and rules obligations under international trade agreements, as it is in practice too difficult for governments to provide different levels of market access among trading partners. For example, all international accounting services providers are likely to receive the same treatment in a particular market regardless of whether the service provider’s country of origin has a trade agreement covering accounting services with the service provider’s destination market.

Similarly, the same customs procedures, sanitary and phytosanitary (SPS) systems, and international standards and conformity assessment systems are likely to be applied on an MFN basis, even if some countries have trade agreements covering customs, SPS, and commitments related to technical barriers to trade (TBT).

MFN serves the greater global public good by being a medium for distribution of high-standard rules set elsewhere in other plurilateral agreements, especially rules that address non-tariff barriers. For example, even though the United States did not join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), it benefits from the high-standard rules commitments the CPTPP established as many of the benefits in the CPTPP are applied on an MFN basis. All countries that are not party to the CPTPP agreement, but that enjoy an MFN relationship with CPTPP members, enjoy these benefits. This pattern is replicated in additional high-standard FTAs.

The application of MFN is not perfect

The way MFN is written as Article 1 in both GATT and the Marrakesh Agreement makes clear that its authors intended any departure from MFN to only occur under defined and specified circumstances.

GATT provides for exceptions from MFN for preferential rates agreed between founding members. GATT Article XXIV further permits preferential rates within customs unions and under FTAs. There are general exceptions to all GATT commitments in Article XXI to address matters of national security. There are also exceptions to MFN for trade preference programs that benefit developing and least developed countries. Relatedly, self-declared “developing countries” under the WTO may also be able to avail themselves of different and more preferential treatment from more advanced trading partners. As outlined in the WTO’s Analytical Index, many of the “exceptions and derogations to the MFN principle” have been focused on exceptions for developing countries.

While MFN is considered international law, its permitted derogations demonstrate that sovereign nations have struggled to consistently apply MFN in its purest legal form. The norms of the WTO system encourage nations to aspire to a more perfect application of MFN and to keep exceptions to this foundational rule limited. Certain exceptions to the MFN principle, such as for FTAs, customs unions, and trade preference programs for developing countries have become accepted WTO norms because they lead to a greater level of trade openness.

What has the US done to MFN that is outside the norm?

Between the founding of the WTO in 1995 and the inauguration of the first Trump administration in 2017, a derogation to MFN for a purpose that was not trade opening was an anomaly. The use of the national security exception in GATT Article XXI was also an anomaly.

The invocation of national security under the first Trump administration’s Section 232 duties on steel and aluminum, imposed in 2018 and continued through the Biden administration, broke with international trade rules including MFN. Section 301 of the Trade Act of 1974, also used to increase duties on certain Chinese products, were similarly out of step with WTO norms. The use of IEEPA takes another significant step in departing from MFN.

As WTO rules permit certain exceptions to MFN, the Trump administration can argue that it is operating within the bounds of international trade law under the global trading system. But the goal of the Trump administration – both the first and second – is decidedly not trade-opening. In addition to new tariffs imposed in July 2025, Trump suspended de minimis, which allowed low-value packages to enter the US duty-free without formal entry documentation.

Who loses?

On a practical level, US tariff increases have disrupted global supply chains, increased costs, and resulted in measurable real-world economic consequences. Analysts project it will precipitate a global slowdown.

But the US actions thwarting MFN created a further existential threat to the foundation of the international trading system.

For a small seller or an individual consumer, trade has gotten far more expensive and complicated. An importer now has to figure out the value and origin of steel or aluminum (or other products subject to Section 232 or 301 duties) in the import, add country-specific IEEPA duties, and check for AD/CVD duties to determine the tariff.

Customs officials now must expand their determination of country of origin to essentially all imports, instead of only those covering FTA origin compliance for preferential treatment, AD/CVD duties, or transshipment. Small businesses and individual importers often cannot afford to hire a customs broker to deal with the increased bureaucratic requirements of determining the duty or filing formal entry documentation. Poorer countries lose out.

MFN is not dead, but it needs rescue

For the time being, the vast majority of countries besides the US are not departing from MFN. Setting aside the potential fear of retaliation from the United States, as a practical matter, most countries do not have the customs enforcement infrastructure to pull off what the United States is trying to do. Some countries, particularly developing and least developed countries, have a difficult enough job performing simple valuation at the border, and may still be using paper customs entry documents.

MFN is well-established in providing for open, transparent, and predictable trade policies, which many countries have found spur economic growth.² MFN makes revenue collection easier, which reduces smuggling.

But one cannot assume that the United States will remain an outlier. The US agreements with Malaysia and Cambodia contain novel commitments that seek to compel these countries to “adopt or maintain a measure with equivalent restrictive effect as the measure adopted by the United States”.

US trading partners need a coordinated response to reinforce MFN and prevent its further erosion. Taking on the world’s largest economy is no small task. Other countries must bring something meaningful to the negotiating table that the United States really wants, but that a large plurality of other countries can also support.

There is room for optimism. The United States continues to engage in the WTO and the Trump administration has indicated openness to achieving multilateral results during the Global Forum on Steel Excess Capacity in 2026.

Strong leadership will be necessary. The United States will host the G7 in 2027, and there is groundwork to be done in 2026. France must use its 2026 host year at the G7 wisely. US trading partners should also take advantage of both ministerial-level meetings of the WTO and Organisation for Economic Co-operation and Development (OECD) taking place in 2026, as well as many other platforms with leader-level engagement, including the Asia-Pacific Economic (APEC) grouping.

The international trading community must band together and take further steps to address the root causes of US unilateral action. Continuing domestic and international pressure, along with real efforts to address US concerns, can keep the reports of MFN’s death merely an exaggeration for now.