Trade

WTO: Trump Never Legally Justified Tariffs On China

SK Ashby
Written by SK Ashby

The vast majority of Trump's tariffs on Chinese goods have been imposed illegally under international trade rules according to the World Trade Organization (WTO).

Ruling on a complaint filed by the Chinese government, the WTO found that the Trump regime never justified the tariffs he first imposed in the summer 2018 and also didn't follow proper procedure when he imposed them.

From Bloomberg:

A panel of three WTO trade experts on Tuesday said the U.S. broke global regulations when it imposed tariffs on Chinese goods in 2018. Washington has imposed levies on $400 billion in Chinese exports.

The panel said in its report “that the United States had not met its burden of demonstrating that the measures are provisionally justified.” [...]

China claimed the tariffs violated the WTO’s most-favored treatment provision because the measures failed to provide the same treatment to all WTO members. China also alleged the duties broke a key dispute-settlement rule that requires countries to first seek recourse from the WTO before imposing retaliatory measures against another country.

Although the WTO has essentially ruled that Trump's tariffs are illegal, there's no further recourse or judgment that China can pursue because, as you may know, the WTO's appellate court has been crippled.

Trump intentionally broke the WTO's dispute process by refusing to consent to the appointment any new judges to the trade organization's appellate body. Previous judges saw their terms expire and the appellate court cannot rule without a minimum number of judges.

In the short term, this can be used as legitimate fodder for the Chinese government. They can tell their other trading partners that the United States is not reliable and they will be correct in saying so.

In the long term, Trump will be replaced by Biden who will end the trade war and restore the WTO's appelate court, or Trump will be reelected and the WTO will be dead and buried. Foreign trade bodies and blocs will start taking matters into their own hands without the WTO's dispute process. That means more protectionism and probably more war.

If we don't agree to one set of international rules, everyone will make their own rules. The European Union has already begun the process of establishing their own alternative to the WTO and if Trump is reelected I'm sure they'll proceed with it. They may not have any other choice because their own laws have integrated the WTO and they would have to break their own laws to settle disputes without amending them to respect their own alternative trade body.