In a recent ruling, the World Trade Organization (WTO) declared that China had violated its trade agreements by imposing retaliatory tariffs on US exports. These tariffs were in response to steel and aluminum duties imposed by the Trump administration in 2018. This blog examines the implications of this ruling, focusing on the impact on US agricultural exporters and the broader US-China trade dispute.
Violation of Trade Agreements
The WTO panel stated that the tariffs imposed by former President Donald Trump on steel and aluminum were justified as they served the legitimate security interests of the United States. Consequently, China’s retaliatory tariffs on agricultural goods and other products were deemed “inconsistent” with a fundamental trade commitment established in 1994. The panel recommended that China reverse these tariffs and align its measures with its obligations under WTO agreements.
Boost for US Agricultural Exporters
The WTO ruling is a significant win for US agricultural exporters, who have suffered major losses in the market since the initiation of the trade war by the Trump administration. According to the US Department of Agriculture, retaliatory tariffs imposed by China from 2018 to 2019 resulted in agricultural exporters missing out on more than $27 billion, with China accounting for 95% of these losses. The ruling provides hope for the recovery and expansion of agricultural trade between the two nations.
Unjust Tariffs and Food Security Concerns
The American Farm Bureau Federation expressed its satisfaction with the WTO decision, with President Zippy Duvall calling China’s tariffs “unjust.” Duvall highlighted the importance of agricultural trade for global food security and emphasized that such trade should not be jeopardized by retaliatory actions related to unrelated concerns. This sentiment underlines the significance of resolving trade disputes and ensuring fair and open markets for agricultural products.
Appeal and Appellate Body Limbo
While China has the option to appeal the WTO ruling, any such appeal would face complications due to the US blocking appointments to the WTO Appellate Body. Without enough members, the Appellate Body is unable to evaluate and make judgments on trade disputes. This political impasse further adds to the complexity of the US-China trade dispute and hampers the resolution of conflicts through established mechanisms.
Immediate Tariff Relief
In response to the WTO ruling, China’s commerce ministry demanded that the US immediately lift its steel and aluminum tariffs. This highlights the swift action expected from the US to comply with the WTO ruling and ease tensions between the two economic powers. The resolution of these specific tariffs could also pave the way for further negotiations and a more comprehensive resolution to the broader trade dispute.
The WTO ruling that China violated its trade agreements by imposing retaliatory tariffs on US exports is a significant development in the ongoing US-China trade dispute. The decision provides relief to US agricultural exporters who have suffered substantial losses due to retaliatory tariffs. However, the appeal process and the blocking of Appellate Body appointments present additional challenges for dispute resolution. Swift action from the US to lift steel and aluminum tariffs in compliance with the ruling could contribute to de-escalation and potentially pave the way for broader negotiations between the two nations.
Tariff Classification Course
Classification Workshop for import, export, FTA determination & clarification on Section 301 and Section 232. Critical information is not only for duty purposes but also to determine whether goods are subject to quotas, restraints, embargoes, or other restrictions.