The United States is preparing to bypass stalled global trade negotiations by forming its own coalition to prevent tariffs on digital services, according to documents obtained by news outlets.
The move comes as Brazil and Turkey continue blocking efforts to extend a worldwide agreement that has prevented duties on digital downloads, streaming services, and software since 1998 at the World Trade Organization.
A draft proposal dated May 1 reveals America’s backup strategy, which would create a separate pact among willing nations. “Beginning on May 8, 2026, we, the co-sponsors of this communication, will continue to not impose customs duties on electronic transmissions among ourselves,” the document states.
The original global moratorium has been renewed multiple times over the past 25 years, protecting everything from Netflix streams to software downloads from cross-border tariffs. However, efforts to extend the deal collapsed during a high-level WTO gathering in Cameroon this past March.
Five diplomatic sources indicate little hope for resolving the standoff before Wednesday’s WTO General Council session in Geneva. If no breakthrough occurs, Washington intends to proceed with its alternative approach, already gaining backing from South Korea, Japan, Australia, and New Zealand.
Countries with major digital economies, including the United States, European Union, Canada, and Japan, view the moratorium as essential for providing stability in global digital commerce and have pushed to make it permanent.
Joseph Barloon, America’s WTO ambassador in Geneva, criticized the impasse caused by opposition from what he called “two members” – apparently referring to Brazil and Turkey. He emphasized that the inability to secure long-term protection highlights the WTO’s difficulties in tackling contemporary trade issues.
“The U.S. has secured commitments from dozens of countries – and nearly all its major trading partners – not to impose tariffs on electronic transmissions and it will continue to support efforts to obtain a plurilateral moratorium on e-commerce duties,” Barloon stated.
The proposed alternative builds upon an April declaration by 23 nations promising not to introduce such duties. While expressing disappointment over the lapse, the draft maintains that achieving a comprehensive multilateral agreement remains the ultimate goal.
Andrew Wilson from the International Chamber of Commerce warned that failing to restore the global moratorium would undermine the WTO’s authority. “It sends a clear signal that WTO rules are slowly eroding away,” Wilson explained, calling a partial agreement “sub-optimal” because it wouldn’t apply universally and could create business uncertainty.
Despite the diplomatic tensions, sources suggest immediate implementation of digital duties remains unlikely. However, the breakdown represents another blow to the WTO’s influence in establishing international trade standards.
Diplomatic efforts between Washington and Brazil since the March failure have produced minimal results, according to two sources familiar with the discussions. Representatives from Brazil and Turkey have not yet responded to requests for comment on the situation.
