Trump administration's tariffs on Chinese goods violated WTO trade rules, report says

AP/Saul LoebUS President Donald Trump and Chinese President Xi Jinping at the G20 summit in Hamburg, Germany.
  • The World Trade Organisation ruled on Tuesday that the US’s tariffs on Chinese goods violated international trade rules, according to Bloomberg.
  • Three panelists found that the Trump administration’s tariffs on more than $US400 billion worth of Chinese exports unfairly targeted the country and skirted the WTO’s dispute-settlement body.
  • The decision is a major hit to the tough-on-China stance President Donald Trump ran on in 2016 and continues to evoke heading into the 2020 presidential election.
  • Still, the administration’s gutting of the WTO’s appellate body effectively allows the US to veto its ruling and avoid enforcement.
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The World Trade Organisation ruled that US tariffs on more than $US400 billion worth of Chinese goods violated international trade rules, Bloomberg reported on Tuesday.

A panel of three trade experts found that the US broke WTO rules when it imposed tariffs on Chinese goods starting in 2018, the report said.

The ruling backs China’s argument that the US unfairly skirted the WTO’s dispute-settlement process; members of the global trade coalition are expected to negotiate with the WTO’s dispute-settlement body before imposing retaliatory tariffs.

China also argued the Trump administration’s tariffs unfairly targeted a single country instead of setting an even playing field for the US and its trade partners.

Though the decision backs China’s claims, the White House isn’t likely to face much backlash. The Trump administration can appeal the ruling over the next 60 days. Doing so would effectively nullify the WTO’s ruling, as the administration has gutted the organisation’s appellate body. The WTO now lacks a sufficient means for hearing appeals, freezing its dispute-settlement system and endangering the organisation’s ability to enforce trade rules.

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The ruling is a major blow to President Donald Trump’s tough-on-China strategy just a few months before the presidential election. Trump has touted the trade war as a boon for American farmers and manufacturers and has accused the Democratic nominee, Joe Biden, of having too lax an approach toward China.

The WTO decision came more than two years after the Trump administration sparked a trade war with China. The administration began by imposing tariffs on solar cells and washing machines in January 2018. The president tweeted in March of that year that trade wars “are good, and easy to win,” before slapping tariffs on steel and aluminium imports.

China fired back the following month, cementing the trade war as a staple issue of Trump’s presidency.

The two nations signed a phase-one trade deal in January, marking the first major step toward deescalating the years-long conflict. But the coronavirus pandemic stalled progress and weakened China’s ability to meet the deal’s purchase targets.

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The agreement called on China to increase its purchases of American goods and services by at least $US200 billion over the next two years. China is also expected to bolster intellectual-property protections and refrain from currency devaluations.

In turn, the US halved the tariff rate on $US110 billion worth of Chinese goods to 7.5%. Other tariffs remain, and Treasury Secretary Steven Mnuchin has indicated that future trade deals would include similar cuts.

Representatives from both countries met in mid-August to discuss progress on meeting the deal’s targets. China’s commerce ministry said the bodies had a “constructive dialogue” and “agreed to create conditions” for meeting the goals.

However, some gauges have suggested that China is far from meeting its targets. The Peterson Institute for International Economics’ purchase tracker indicated it imported only $US48.5 billion worth of US goods as of July, well below the $US100 billion needed to stay on pace for its 2020 goal.

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