U.S. Tariffs Violated WTO Rules, Panel Finds

The WTO sided with a complaint from China over tariffs imposed on about $234 billion in goods in 2018.
Lauren MuskettSeptember 16, 2020
U.S. Tariffs Violated WTO Rules, Panel Finds

Tariffs imposed by the U.S. government on Chinese goods were inconsistent with international trade rules, a World Trade Organization panel ruled Tuesday.

In the report, the WTO sided with a complaint from China over tariffs imposed on some $234 billion in goods in 2018.  The tariffs were applied only to China’s products and exceeded rates the U.S. was bound to in its schedule of concessions and were not shown to be “necessary to protect public morals.”

“The United States has not met its burden of demonstrating that the measures are provisionally justified,” the panel said, adding it was, “very much aware of the wider context in which the WTO system currently operates, which is one reflecting a range of unprecedented global trade tensions.”

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The U.S. has imposed tariffs on an estimated $400 billion in Chinese exports since March 2018.

The U.S. said that by agreeing to bilateral negotiations, China had decided to settle its dispute with the U.S. outside the WTO. It has also argued that China’s trade policies amounted to “state-sanctioned theft.”

“Although the panel did not dispute the extensive evidence submitted by the United States of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct,” U.S. Trade Representative Robert Lighthizer said. Lighthizer said the WTO’s decision confirmed the U.S. view that the WTO was “completely inadequate” and ineffective in confronting China.

China’s trade ministry said the ruling was “objective and fair” and said the country has a “firm determination to respect WTO rules and maintain the authority of a multilateral trading system.”

On Tuesday the Trump administration also agreed to lift a 10% tariff on imports of aluminum from Canada it imposed in August, just ahead of an expected announcement of retaliatory tariffs.

The U.S. said the imports threatened national security. Myron Brilliant, head of international affairs at the US Chamber, said the lifting of the aluminum tariffs was positive.

“What American manufacturers need now is certainty that these tariffs won’t make another reappearance,” Brilliant said.

Mark Ralston/AFP via Getty Images