The World Trade Organization (WTO) has ruled against China's imposition of tariffs on $2.4 billion worth of US products in 2018, which were set in retaliation against then-President Donald Trump's duties on steel and aluminum imports. In a recent declaration, a trio of WTO specialists concurred with the US's assertion that these Chinese tariffs contravened the "most favored nation" principle. This central tenet of the WTO mandates its 164 members to accord non-discriminatory treatment to fellow signatories, or else make compensatory trade allowances.
The ruling, however, is not final. Both the US and China retain the right to challenge the decision within the next two months. A potential appeal from China could automatically counteract the decision, given the WTO's appellate body has been rendered inactive since 2019. This ongoing tussle can be traced back to the Trump administration's institution of a 25% tariff on global steel and a 10% duty on aluminum imports. The initial US tariffs, designed to mitigate the inflow of inexpensive Chinese metals, elicited China's retaliatory tariffs on American imports including aluminum scrap, pork, and various fruits.
In a retaliatory move, the US lodged a counter-complaint with the WTO regarding the Chinese tariffs and maintained that the levies on metal were crucial for safeguarding American national security. Adding another layer to this convoluted trade drama, a separate WTO panel in December 2022 ruled that the US's metal tariffs couldn't be rationalized under the WTO's provisions for national security, a judgment the Biden administration firmly opposed. As of now, Trump’s duties on Chinese steel and aluminum persist.
This article was originally published on Quiver Quantitative