The United States has formally exited the Paris Agreement for the second time, completing a year-long withdrawal that places the world’s largest economy outside the central framework for international climate action. The move follows an Executive Order signed at the start of President Donald Trump’s current term and goes further than the 2020 withdrawal by also pulling the US out of the United Nations Framework Convention on Climate Change (UNFCCC), the legal foundation underpinning the Paris Agreement.

With the withdrawal now in effect, the US stands alone among major economies outside the pact, raising concerns about the durability of global climate governance at a moment when climate policy is increasingly intertwined with industrial strategy, energy security, and capital flows.

A Break With the Global Climate Framework

The second US exit reverses the re-entry decision taken by President Joe Biden in early 2021 and marks a broader retreat from multilateral climate institutions. Analysts describe the combined withdrawal from both the Paris Agreement and the UNFCCC as a structural break, removing the US from formal negotiations, reporting obligations, and cooperative mechanisms that shape global climate ambition.

Internationally, the timing is significant. At COP30 in Brazil, parties reaffirmed the Paris goals of keeping global temperature rise well below 2°C and pursuing efforts toward 1.5°C. Shortly after the US exit took effect, the UNFCCC reiterated that the agreement remains the shared framework guiding climate action for 194 countries, underscoring the isolation of the US position.

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Diplomatic and Economic Headwinds

Diplomats and energy analysts warn that US disengagement could weaken political momentum for climate cooperation, particularly in emerging economies where international signals influence domestic policy and access to finance. Climate frameworks increasingly guide investment in clean manufacturing, critical minerals, and infrastructure, linking emissions reduction with competitiveness and supply chain resilience.

Some observers also point to potential spillover effects. The absence of US leadership may embolden countries facing internal resistance to climate action, while complicating negotiations on climate finance, technology transfer, and loss and damage mechanisms.

Domestic Rollbacks and Global Signals

The international withdrawal coincides with a broader rollback of US federal climate policies, including the cancellation of clean energy programs, revisions to greenhouse gas regulations, and a halt to offshore wind development. President Trump has repeatedly argued that climate policies harm economic growth, framing decarbonization as incompatible with competitiveness.

Former US climate officials caution that such signals matter globally. Sue Biniaz, a former deputy US climate envoy, has noted that multilateral climate regimes play a critical role in shaping expectations and accelerating action, even when enforcement is limited. Analysts warn that US disengagement could be used by other governments as justification to slow their own transitions.

There are also implications for China. Some experts argue that US withdrawal strengthens the hand of fossil fuel advocates within China, potentially moderating the pace of its energy transition despite continued large-scale investment in renewables.

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Markets Move Ahead, Unevenly

Despite geopolitical uncertainty, clean energy markets continue to expand. Renewables accounted for more than 90 percent of new global power capacity additions last year, while electric vehicles, solar manufacturing, and grid technologies continue to scale, driven largely by Asian markets and industrial policy.

However, increased US fossil fuel production could influence global energy markets, particularly as electricity demand rises from data centers and AI-driven infrastructure. Analysts warn that the US exit may also make it harder for low-income countries to secure climate finance, as political backing from major economies often underpins multilateral funding mechanisms.

Subnational Action and Credibility Gaps

While federal policy has retreated, climate action within the US has not disappeared. Governors from 24 states have pledged continued alignment with Paris goals, and leaders such as Gavin Newsom have reaffirmed commitments to emissions reductions and international cooperation at the state level.

Even so, analysts argue that a second withdrawal further erodes US credibility. As climate-related economic losses mount and global temperatures continue to rise, the effectiveness of international climate action may increasingly depend on how successfully other countries and markets adapt to the absence of sustained leadership from the world’s largest economy.

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