WTO rules in favour of US, declares China's retaliatory tariffs contrary to group's principles

The World Trade Organization (WTO) said China's tariffs on $2.4 billion of U.S. goods, in response to then-U.S. President Donald Trump's steel and aluminum charges, breached its core trade agreements.

In its verdict on Wednesday, a panel of three WTO experts agreed with Washington that China's tariffs denied the most-favored country status and breached other trade concessions made when the country joined the trade organization.

The WTO’s 164 members must treat other signatories indiscriminately or grant commercial benefits per its most-favored country principle.

The Biden administration was "pleased" with the verdict and claimed China's actions show Beijing's "hypocrisy by both suing the US in the WTO and unilaterally retaliating with tariffs," according to US Trade Representative spokeswoman Sam Michel.

China's Ministry of Commerce justified the tariffs, claiming that they are necessary to protect the country's legal interests. It requested the US eliminate the tariffs in a statement published following the verdict.

Within the following 60 days, either China or the United States may file an appeal. Because the WTO's Appellate Body has been inactive since 2019, Beijing's petition will serve as a veto.

The conflict stretches back to the early days of Trump's trade battle, when his administration placed tariffs of 25 percent on global steel imports and 10 percent on aluminum imports.

The US metal tariffs, intended to reduce an influx of cheap Chinese steel and aluminum, prompted Beijing to launch a WTO complaint and slap taxes on a variety of imported US items, including aluminum waste and scrap, pork, fruits, and nuts.

The US replied with a counter-dispute, claiming that the Chinese taxes were illegitimate and that the metal tariffs were required to preserve US national security.

However, a separate WTO tribunal ruled in December 2022 that US metal charges were not justified under the WTO's national security exception, a decision that the Biden administration vigorously opposed. Trump's steel and aluminum tariffs on China remain in place.

(Inputs from Bloomberg)

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