This article was independently developed by The Economy editorial team and draws on original analysis published by East Asia Forum. The content has been substantially rewritten, expanded, and reframed to provide a broader context and greater relevance. All views expressed are solely those of the author and do not represent the official position of East Asia Forum or its contributors.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
American Automotive Policy Council criticizes outcome of U.S.–Japan trade talks. Warns of declining price competitiveness as U.S. automakers still face tariffs on parts. Raises speculation that auto tariffs may be on the table in upcoming U.S.–South Korea negotiations.
Major U.S. automakers are pushing back against the recent trade agreement between the Trump administration and Japan, warning that tariff cuts on Japanese auto imports could undermine the competitiveness of American car manufacturers. Industry leaders argue that lowering import duties for Japan gives foreign rivals an unfair edge while U.S. companies continue to face high costs in a tightly contested global market.
According to The Wall Street Journal on July 23 (local time), the United States has agreed to cut import tariffs on Japanese automobiles from 25% to 12.5%—a move that immediately sent shockwaves through the global auto industry. Following the announcement, Toyota shares surged nearly 14% on the Tokyo Stock Exchange, marking their biggest single-day gain in 15 years. Honda stock also jumped more than 11%, as investors viewed the agreement as a bullish signal for Japanese automakers.
In stark contrast, Detroit’s major carmakers expressed discontent. Matt Blunt, president of the American Automotive Policy Council—which represents General Motors (GM), Ford, and Stellantis—criticized the deal, saying, “Vehicles imported from Japan contain little to no U.S.-made components, whereas cars produced in North America rely heavily on American parts. Granting lower tariffs to Japanese vehicles is a bad deal for American industry and workers.” U.S. automakers fear that the lowered tariff rate could give Japanese rivals a decisive competitive edge in the American market.
Industry frustration stems in part from the fact that Detroit’s Big Three also face considerable tariff burdens. Despite being American brands, a large portion of their vehicles are assembled overseas and then imported into the U.S. GM, for example, imports nearly half of the vehicles it sells domestically. Stellantis manufactures its high-margin Ram pickup trucks in Mexico and Chrysler Pacifica minivans in Canada. Ford’s popular Bronco Sport SUV is also produced in Mexico. This heavy reliance on cross-border production means U.S. automakers are not exempt from the very tariff pressures now being eased for Japan.
In a revealing contradiction, Detroit’s Big Three—who favor maintaining tariffs on imported Japanese vehicles—have voiced opposition to the Trump administration’s tariffs on auto parts. Back in April, six major industry groups representing American automakers and parts suppliers sent a joint letter to the Departments of Treasury and Commerce, urging a rollback of certain tariff measures. “Most companies do not have the financial capacity to absorb the sudden shock of new tariffs,” the letter stated, warning that many manufacturers were facing production shutdowns, layoffs, or even bankruptcy. “While we support a shift toward U.S.-centered supply chains, reconfiguring global sourcing systems cannot happen overnight—or even within a few months,” the groups added.
Industry analysts say this apparent double standard reflects a broader “America First” economic mindset. “From the perspective of U.S. automakers, tariffs on foreign-made vehicles help enhance price competitiveness and gain market share,” one market expert noted. “If international rivals are forced to raise prices due to higher costs, it naturally strengthens Detroit’s position.” However, the same analyst pointed out that parts tariffs directly harm the Big Three, which import a large share of their components. “There’s no real strategic justification for supporting parts tariffs—they’re simply bad for domestic manufacturers,” the expert said.
In response to industry pressure, the Trump administration announced partial relief on auto parts tariffs at the end of April. Under the new rule, automakers will receive temporary exemptions on up to 15% of vehicle value this year and 10% next year—provided the vehicles are manufactured in the U.S. Still, many in the industry have dismissed the move as a short-term fix. The 25% tariff on auto parts is scheduled to be fully reinstated on May 1, 2027, leaving automakers exposed to long-term cost pressures.
If the Trump administration moves to lower auto tariffs in trade talks with countries beyond Japan, tensions with the Detroit Three are expected to intensify. According to a recent Bloomberg report citing multiple sources, the United States is currently pursuing negotiations with South Korea that could lead to a 15% tariff rate on automobiles—similar to the recent deal with Japan. In return, Seoul may be asked to increase purchases of U.S. agricultural products and aircraft.
However, the path forward is far from clear. A planned high-level meeting between the two countries, originally scheduled for July 25, was abruptly canceled. South Korea’s Ministry of Economy and Finance announced at 9:28 a.m. on July 24 that the "2+2" meeting was called off due to scheduling conflicts on the part of U.S. Treasury Secretary Scott Besent. South Korea’s delegation was to include Deputy Prime Minister Kyungho Choo and Trade Minister Yeo Han-koo, while the U.S. side was to be represented by Besent and U.S. Trade Representative Jamison Greer.
The cancellation notice reportedly arrived just 85 minutes before Deputy PM Choo was scheduled to depart, forcing him to turn back at Incheon Airport. The Ministry said that the U.S. side expressed regret multiple times and proposed to reschedule the meeting as soon as possible. Still, the last-minute cancellation has raised concerns among observers that the U.S. may be deprioritizing negotiations with South Korea in favor of talks with the European Union and China.
Ripple expands its influence through partnerships with international financial institutions. Launches stablecoin RLUSD to push for entry into regulated finance. U.S. banking sector warns against granting banking licenses to crypto firms.
Ripple, a blockchain-based payments company, is rapidly gaining traction in the global financial landscape. The firm is strengthening partnerships with international financial institutions—including the International Monetary Fund (IMF)—and is pushing aggressively to obtain a banking license as it seeks full integration into the regulated financial system. These efforts are also boosting the visibility and adoption of its digital assets, including XRP and RLUSD, Ripple’s U.S. dollar–denominated stablecoin.
On July 23 (local time), crypto-focused outlet EtherNews reported that Ripple has joined the International Monetary Fund’s High-Level Advisory Group on Fintech, further strengthening its presence within the global financial system. Ripple’s appointment signals formal recognition by the IMF of the company’s expertise and technological leadership in the fintech space. According to Ripple’s internal documents, the firm is expected to contribute policy recommendations for small island nations, advise on system architecture, and support initiatives to improve cross-border remittance systems.
Ripple’s collaboration with international financial institutions is not limited to the IMF. The company is actively participating in the Bank of England’s next-generation Real-Time Gross Settlement (RTGS) system research initiative, known as the Accelerator Program. Ripple was also a member of the U.S. Federal Reserve’s Faster Payments Task Force, contributing to discussions on upgrading national payment infrastructure. Additionally, Ripple has signed a cross-border payments technology agreement with the Saudi Arabian Monetary Authority.
As Ripple’s institutional presence grows, its native token XRP is experiencing a sharp upward trajectory. XRP recently surged to an all-time high of $3.65 (approx. ₩5,074), pushing its market capitalization to around $205 billion (approx. ₩285 trillion). That valuation surpasses major global corporations such as Uber, Siemens, AT&T, and Blackstone. Analysts say that if this momentum continues, XRP could soon challenge megacaps like HSBC and Toyota, marking a significant shift as digital assets begin to rival traditional financial powerhouses.
Ripple is accelerating its push beyond institutional partnerships toward direct participation in the financial services sector. On July 2, Ripple Labs CEO Brad Garlinghouse announced via social media that the company has formally applied for a national bank charter with the U.S. Office of the Comptroller of the Currency (OCC). “If approved, we will be subject to both state and federal oversight,” Garlinghouse wrote, calling the move “a new and distinctive benchmark of trust in the stablecoin market.”
According to Ripple Labs’ charter application, the company aims to launch a federally chartered national trust bank without FDIC insurance and to secure a central bank account with the Federal Reserve. The proposed entity—Ripple National Trust Bank—would provide custody and reserve management services for RLUSD, Ripple’s U.S. dollar–backed stablecoin. Jack McDonald, CEO of Ripple subsidiary Standard Custody and Trust, has been tapped to lead the new institution.
Should Ripple receive OCC approval and officially enter the regulated banking system, analysts expect a major shake-up in the U.S. stablecoin market. Because stablecoins are inherently tied to trust and regulatory credibility, licensed financial institutions enjoy a distinct competitive edge. According to crypto ratings firm Bluechip, news of Ripple’s bank charter application helped propel RLUSD to the No. 1 spot among stablecoins, reinforcing its image as a “safe and regulated” digital asset.
Major U.S. banking associations are pushing back strongly against efforts to grant national bank charters to cryptocurrency firms like Ripple. According to multiple media reports, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) recently submitted a joint letter to the OCC, urging the agency to delay approval of banking licenses for Ripple, Circle, and similar companies. The groups cited a lack of transparency in the public portions of the applications and warned that insufficient information has been provided for the public to fully understand these firms’ business models or assess potential risks.
The banking industry has also raised doubts about whether crypto firms can meet the custodial standards required of national trust banks. Critics argue that companies primarily offering custody of digital assets and related services may not qualify under OCC requirements. Under U.S. law, national trust banks are expected to perform fiduciary duties such as trust and estate management, and the OCC has indicated that mere safekeeping of digital assets does not meet that standard.
Banking officials further warned that granting full banking licenses to digital asset custodians would mark a significant departure from existing regulatory frameworks and could set a precedent with far-reaching implications for the broader banking system. Some experts have also called for greater transparency in the OCC’s charter review process, emphasizing the need for clearer disclosures regarding the operational plans of crypto firms seeking banking privileges.
U.S. turns to steep tariffs as a tool to protect domestic Big Tech. Pulls out of OECD agreement on global minimum tax. Digital economy increasingly driven by U.S.-based tech giants.
The Trump administration is increasingly seen as using trade wars as a tool to shield U.S. Big Tech companies from foreign taxes and regulations. Analysts say Washington is leveraging tariff negotiations to pressure other countries into dropping digital taxes and oversight measures, thereby safeguarding the profitability of American tech giants. In fact, several countries—including Canada, India, and Indonesia—have reportedly agreed to roll back or suspend plans for digital services taxes as part of broader trade talks with the United States.
On July 23 (local time), The Wall Street Journal reported that taxation of U.S. Big Tech firms has become a central sticking point in ongoing trade talks between Washington and countries such as South Korea, the European Union, and Brazil. The Trump administration is reportedly using trade disputes as leverage to protect the interests of American tech companies—employing high tariffs and access to the U.S. market as bargaining chips to block foreign governments from imposing taxes or regulations on U.S. digital giants.
The strategy has already prompted a noticeable rollback of digital tax measures around the world. In June, Canada scrapped its planned digital services tax targeting multinational tech firms after the Trump administration threatened to suspend bilateral trade negotiations. India similarly abandoned plans to introduce such a tax during its tariff talks with the U.S., while Indonesia dropped proposed levies on movie and software downloads as well as electronics.
According to WSJ, this policy approach is backed by years of aggressive lobbying by the U.S. tech industry. Google, Meta, Amazon, Apple, Microsoft, and OpenAI each reportedly donated over $1 million (approx. ₩1.45 billion) to Trump’s inauguration fund. Meta CEO Mark Zuckerberg and Google CEO Sundar Pichai are also said to have made repeated visits to Mar-a-Lago, Trump’s Florida residence, to discuss international regulatory policies.
The Trump administration’s determination to defend American Big Tech was again on display in its recent decision to withdraw from the OECD’s global minimum tax agreement—known as “Pillar Two”—a move that shocked international markets. On June 27, U.S. Treasury Secretary Scott Besent announced via X (formerly Twitter) that, after “months of productive discussions with G7 partners,” the U.S. would unveil a new framework to safeguard national interests. “Going forward,” he wrote, “the OECD global minimum tax will not apply to U.S. companies.”
Shortly after taking office, President Trump signed an executive order explicitly rejecting the OECD tax rules, arguing that the policy would undermine U.S. taxing authority and place American companies at a competitive disadvantage. Citing that executive order, Besent stated, “Thanks to President Trump’s leadership, we’ve secured a great deal for the American people. Exempting U.S. firms from this policy prevented over $100 billion in losses.” The Treasury’s estimate refers to the taxes U.S. multinationals would otherwise have paid to foreign governments over the next decade under the OECD rules.
The global minimum tax, introduced under the OECD framework, allows countries to impose top-up taxes on multinational corporations headquartered in jurisdictions with effective tax rates below 15%. If implemented, the policy would require large multinational firms with consolidated annual revenues of €750 million (approx. $1.2 billion) or more to pay at least 15% in corporate taxes, regardless of where they operate. The policy—often referred to as a “Google tax”—is designed to prevent tech giants like Google and Apple from shifting profits to low-tax jurisdictions through foreign subsidiaries.
The U.S. government’s aggressive support for Big Tech reflects the central role digital industries play in underpinning the American economy. The digital economy—which encompasses e-commerce, digital services (such as communications, internet, and cloud computing), and infrastructure (including software and hardware)—was valued at $4.3 trillion (approx. ₩5,880 trillion) in 2022, according to the latest data from the Bureau of Economic Analysis (BEA). The sector is also a major driver of employment, with the U.S. Department of Commerce reporting in 2024 that approximately 8.9 million Americans are employed in digital economy–related jobs.
Big Tech companies are also delivering strong performance in trade. In 2023, U.S. exports of digitally delivered services reached $655.5 billion (approx. ₩896 trillion), up 31% from 2018, according to BEA data. Over the same period, total U.S. service exports grew by 19%, highlighting the sector’s outsized growth. Profit margins are robust as well: imports of digital services in 2023 totaled $388.8 billion (approx. ₩532 trillion), resulting in a trade surplus of $266.8 billion. This substantial imbalance underscores how essential Big Tech is to America’s export economy—and why any global tax measures that diminish these firms’ earnings could significantly damage U.S. economic performance.
Still, critics argue that unconditionally backing Big Tech may not be a sustainable policy. “Concerns are growing among Democrats and U.S. labor groups that the government is overprotecting highly profitable tech firms,” said one market analyst. “Unilateral efforts to shield domestic companies risk worsening trade tensions with partner countries, undermining global regulatory coordination, and causing collateral damage to non-tech sectors.”
Fading first-mover advantage dilutes competitive edge
Technology-driven strategies fall short in a crowded race
Data access restrictions worsen model training conditions
Once hailed as the unrivaled frontrunner in the artificial intelligence (AI) sector, OpenAI is now grappling with mounting concerns over its weakening position. As its technological edge erodes, a host of external challenges—including crawling restrictions by major search engines and rising investments from competitors—are intensifying doubts about the company’s competitiveness. In the face of an evolving generative AI landscape, data accessibility and cost resilience have emerged as critical variables in ensuring long-term ecosystem growth.
According to industry sources on July 23 (local time), JP Morgan released a recent report stating that “OpenAI’s early advantages and brand strength are gradually diminishing due to intensifying competition.” As newer players close the gap, the exclusivity that once defined OpenAI’s offerings is now increasingly blurred. The report also warned that “OpenAI is unlikely to turn a profit before 2029, testing investor patience over what has been dubbed ‘vibe spending.’”
“Vibe spending” is a neologism combining heavy research and development (R&D) costs with the contemporary term “vibe coding.” It encompasses expenses related to computing infrastructure and talent acquisition. Industry observers note that with tech giants like Meta entering the AI race, labor costs—previously considered negligible—have risen significantly across the board.
Meanwhile, OpenAI’s flagship service architecture, once epitomized by ChatGPT, is increasingly vulnerable to user churn. “As technology matures, users begin to choose platforms based on not just functionality but also cost, integration, and sustainability,” JP Morgan noted. “This marks a pivotal moment where differentiation across the entire service experience becomes essential.” In response, OpenAI is seeking its next evolution, exploring OS-level platform architecture and developing AI agent-based services.
These efforts signal a shift away from simple conversational models toward more autonomous and intelligent agents—so-called “Agent GPTs.” Yet with competitors pursuing similar strategies, the ability to seize first-mover advantage is fading. While OpenAI’s product suite remains formidable, having a lead in isolated features no longer suffices to steer the entire ecosystem. That, at least, is the prevailing view in the market.
Another blow to OpenAI’s standing is the expansive investment surge from rival tech giants. Google, Meta, and Anthropic are injecting massive R&D budgets into AI development in a bid for leadership. Meta, for instance, is expanding the reach of its open-source LLaMA series to accelerate technological diffusion, while Google is leveraging its Gemini series and its offshoots to broaden its market influence. These moves suggest that the age of monopolized AI dominance is giving way to a more pluralistic paradigm.
Startups are also gaining traction. New entrants like Cohere and Mistral are carving out niche markets with distinctive strategies, experiencing rapid growth in the process. Armed with lean development pipelines and flexible API policies, these firms are agile in responding to enterprise needs. In contrast to OpenAI’s more closed architecture, such approaches are attracting defectors from its customer base.
The battle for AI dominance has thus shifted beyond sheer technical sophistication. The new imperative is how swiftly companies can productize innovations and integrate them into scalable service ecosystems. While model performance once reigned supreme, factors like ease of API integration, customizability, and licensing flexibility are now driving competition. As OpenAI’s technical lead diminishes, strategic operations and platform-building capabilities are emerging as new pillars of strength.
A more fundamental challenge, however, lies in the deteriorating environment for data acquisition. As AI technologies evolve at breakneck speed, major content platforms are increasingly restricting web crawling access. The New York Times, Google, and Naver have begun either blocking crawling entirely or placing firm limits on data collection for AI training. Some platforms have gone as far as updating bot access protocols or outright blocking premium content from automated access.
OpenAI, which had long relied on large-scale web crawling to feed its GPT models, now finds itself unable to secure data on the same scale, as leading media and content providers raise copyright objections. At least nine major news outlets, including the New York Times, have filed lawsuits against the company, with several more reportedly preparing legal action.
This shift signals a profound challenge for the entire generative AI industry. As access to up-to-date news content, community discussions, and search data becomes increasingly restricted, the quality and diversity of AI-generated responses inevitably decline. In the long run, this could erode user satisfaction and weaken the competitiveness of AI services overall.
As a result, more companies are now moving away from unlimited crawling and instead securing training data through formal licensing agreements. But this too comes at a cost. The financial burden of licensing may widen the gap between firms, potentially exacerbating inequality within the ecosystem. With cracks now visible in infrastructure quality and limits emerging in technological advancement, each company’s ability to navigate these hurdles will ultimately determine its competitive edge.
Avoiding a 30% tariff at all costs, the EU opts for damage control
Beneath the optics of stability lies a defensive compromise
Trump’s negotiation playbook yields familiar results once again
The European Union has edged closer to a trade agreement with the United States, narrowly avoiding the threat of steep tariffs on auto exports. But the deal is already being criticized as an empty concession. While the framework appears to preserve existing tariff levels—reportedly around 15%—key categories like steel have been left entirely off the table. With major trade partners increasingly taking a defensive posture in response to U.S. pressure, analysts say the EU has joined others in adopting a pragmatic strategy: concede for now, and seek real gains later.
On July 23 (local time), the Financial Times reported that Washington and Brussels are nearing a deal to set a 15% tariff on European imports. Citing multiple sources, the FT noted that the agreement is aimed at heading off a looming 30% tariff President Donald Trump has threatened to impose starting August 1. The two sides are also reportedly considering exemptions for select categories, including aircraft, spirits, and medical devices.
Since April, EU products have faced a baseline U.S. tariff of 4.8%—plus an additional 10%—effectively raising the average rate to nearly 15% already. As such, the proposed agreement has been widely interpreted as maintaining the status quo. Though slightly higher than the rate Brussels had originally sought, the 15% figure aligns with the deal the U.S. reached with Japan just a day earlier. The FT suggested that pressure from the Japan-U.S. deal may have cornered the EU into accepting the higher rate.
If finalized, the agreement would also slash the current 27.5% tariff on European autos down to 15%. For Washington, the deal preserves existing tariff structures while avoiding retaliatory measures from Europe. For the EU, it offers a politically palatable win—protecting domestic industries without escalating tensions. Observers across diplomatic circles view the arrangement as a tactical maneuver driven more by political risk management than by economic value.
That said, some of the EU’s most sensitive sectors—most notably steel—were excluded from negotiations altogether. The White House has previously floated a 50% tariff on European steel, and signs point to continued restrictions in that sector. Talks on steel are now expected to proceed separately. Brussels, for its part, is keeping its own countermeasures on standby: if a deal isn’t reached within the month, the EU plans to activate a retaliatory tariff package of up to 30%, targeting $109.5 billion in American goods.
While the EU and the United States have reached broad consensus around maintaining a 15% tariff rate, criticism is mounting across Europe that the bloc has walked away with nothing. Although the immediate threat of steep new tariffs has been defused, the EU failed to secure any meaningful concessions in return—no rate reductions, no expanded market access. In European industry circles, the dominant view is that the deal amounts to a purely defensive compromise: one that preserved existing advantages, but did nothing to soften U.S. demands.
This isn’t a uniquely European dilemma. Across the board, America’s major trading partners are increasingly finding themselves trapped in similar patterns of “uncomfortable compromise.” Japan and the Philippines both reached agreements with Washington in recent months, largely to sidestep threats of high tariffs—only to settle for minimal gains. The EU’s response mirrors this approach: not to challenge Washington head-on, but to mitigate fallout, even if that means accepting terms largely set by the U.S.
The concern now is that this compromise model is becoming a norm, not an exception. Past trade agreements appear to be establishing de facto baselines for future negotiations, locking countries—Europe included—into a cycle of pressure, defensive bargaining, and status quo outcomes. The result is a narrowing of independent trade policymaking and a steady expansion of U.S. leverage at the global negotiating table.
Behind the global trend of settling for tariff deals that barely deviate from the status quo lies a deeper shift: a learned response to President Trump’s unpredictable negotiating style. Many countries that endured his first term—marked by sudden tariff threats and abrupt reversals—have since recalibrated their strategies. Confrontation has given way to diplomatic survival mode: agree to the big-picture terms, then claw back key details later.
The EU’s approach fits squarely within this playbook. It maintains the existing 15% tariff level while postponing discussion on more politically sensitive items like steel—minimizing risk without abandoning core interests. While this may yield limited tangible benefits, it’s widely seen as an effective way to contain political risk. Across the diplomatic spectrum, there's growing consensus that with a counterpart like Trump—erratic and prone to escalating external pressure—conciliatory tactics often work better than direct confrontation.
In some cases, this approach even entails visible humiliation. The Philippines offers a recent example. On July 22, President Ferdinand Marcos Jr. visited the United States for a bilateral summit with Trump. But instead of a showcase for diplomacy, the event turned into a lopsided media spectacle. While Trump fielded questions from reporters for 40 minutes, Marcos barely spoke—reduced, in the eyes of many Filipinos, to little more than a backdrop for U.S. political theater.
While this kind of strategic deference may help preserve ties and secure short-term stability, it risks setting a dangerous precedent. When concessions are granted easily and repeatedly, they start to look like the expected cost of engagement. For leaders like Trump, who regularly weaponize economic issues for political ends, such patterns only reinforce their instinct to dictate rather than negotiate.
The United States withdraws from UNESCO for the third time. The move underscores growing U.S. resistance to multilateral institutions seen as promoting progressive values. Trump administration claims ideological misalignment; critics warn of long-term diplomatic costs.
In a dramatic yet familiar move, the United States has once again severed its ties with UNESCO, the United Nations’ cultural and educational agency. Announced in July 2025, this withdrawal marks the third such exit in U.S. history and is being championed by the Trump administration as a rejection of what it calls "ideological excesses." As the global community grapples with complex cultural, environmental, and educational challenges, America’s disengagement reignites debate over its place in the world and the cost of retreating from multilateral diplomacy.
UNESCO Director-General Audrey Azoulay wasted no time responding to the United States’ withdrawal, voicing deep regret over a decision that she says undermines decades of cultural collaboration. According to her statement, UNESCO has significantly benefited from U.S. leadership, especially in advancing global education, heritage preservation, and freedom of expression. Azoulay emphasized that at a time when misinformation, cultural erosion, and climate education demand coordinated action, disengagement from a significant power like the U.S. weakens collective efforts.
Azoulay also pointed out that while each member nation maintains its sovereign right to participate or withdraw, UNESCO thrives on dialogue, not division. "The challenges we face today are too big for any one country to solve alone," she said. Her call for recommitment to shared values highlights what many international observers interpret as the growing chasm between U.S. domestic politics and its historical role as a global leader.
The withdrawal also raises practical concerns. From funding contributions to intellectual and technical leadership, the U.S. has played a pivotal role in initiatives such as World Heritage Site protection and global literacy. Now, the absence of that support may not only hamper ongoing programs but also embolden other skeptical nations to step back from cooperative global engagement.
While the recent decision made headlines, it did not come as a complete surprise. It fits into a broader ideological narrative that has been building for years. According to a report from France 24, the Trump administration cited UNESCO’s increasingly progressive stance, often labeled as “woke” by its critics, as the primary reason behind the exit. Issues such as decolonizing education, inclusive language, and support for minority heritage have become flashpoints for cultural conservatives.
Administration officials claimed that the agency no longer reflects “American values,” particularly on issues such as gender identity, race-based curriculum reforms, and what they perceive as political bias in the handling of global historical narratives. This critique resonates with a segment of U.S. voters who believe that international institutions promote ideologies that are at odds with their own views.
However, critics argue that this framing is both shortsighted and dangerous. UNESCO’s work encompasses far more than progressive ideology; it safeguards tangible cultural assets, facilitates scientific cooperation, and fosters literacy and sustainable development. By reducing its role to ideological disagreements, opponents of the withdrawal warn that the U.S. risks surrendering its influence to nations with vastly different agendas.
The consequences may extend beyond UNESCO. A pattern of disengagement, critics say, erodes America’s credibility across the United Nations system and beyond. It also opens doors for rival powers to fill the leadership vacuum left by Washington, allowing China, Russia, and others to shape the narrative in institutions the U.S. once helped build.
This marks the second time Donald Trump has withdrawn the U.S. from UNESCO; his administration previously initiated a withdrawal in 2017, citing similar concerns about institutional bias and fiscal inefficiency. Although the U.S. rejoined in 2023 under President Biden, the 2025 exit reveals just how precarious American engagement in international organizations has become.
Trump’s distrust of UNESCO reflects a broader skepticism toward multilateral organizations, many of which he accuses of favoring humanitarian causes over what he views as core U.S. interests. Whether it’s climate accords, refugee agreements, or international health collaborations, Trump has consistently framed global cooperation as a threat to national sovereignty.
For institutions like UNESCO, this creates an existential dilemma. Without consistent U.S. support, they must recalibrate their strategies, financially and diplomatically. Some analysts predict that the agency will shift its focus more toward European and Asian member states for leadership. In contrast, others worry that recurring U.S. exits may eventually erode its effectiveness altogether.
Still, Trump’s critics contend that his hostility toward UNESCO stems not from inefficiency or mismanagement, but from opposition to its humanitarian mission. By walking away from educational equity, cultural preservation, and international science initiatives, they argue, the U.S. is not only isolating itself but also abandoning its legacy.
The U.S. exit from UNESCO is not merely a bureaucratic reshuffling; it is a geopolitical signal. It speaks to an inward turn in American diplomacy, one that prioritizes ideological purity over collaborative problem-solving. While Trump’s supporters cheer the decision as a stand against “woke” overreach, its critics see it as another step toward diplomatic irrelevance.
As challenges like climate change, cultural destruction, and educational inequality mount, institutions like UNESCO are more vital than ever. Whether the U.S. eventually returns or continues to drift away from global institutions, its choices will shape not only its reputation but also the very structure of international cooperation in the decades ahead.
For now, the world watches as one of its oldest democracies turns its back, again, on a platform built to unite.
