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WTO decision: US tariffs violate global trade rules

WTO decision: US tariffs violate global trade rules

Status: 12/09/2022 21:43

The punitive tariffs on steel and aluminum imposed by the Trump administration in 2018 are illegal as per the WTO ruling. But the current US government led by Biden probably doesn’t want to cancel it either.

Punitive tariffs imposed by the United States on steel and aluminum imports in 2018 violated global trade rules. This was decided by the arbitral tribunal of the World Trade Organization (WTO). China, Norway, Switzerland and Turkey sued the measure introduced by the then US government under Donald Trump. The EU initially sued, but let the case linger.

The United States imposes tariffs of up to 25 percent on imports of steel and aluminum — because the imports are said to threaten its national security. Under WTO rules, countries can suspend duty-free imports without additional justification to protect national security. So the US government was of the opinion that the WTO Court of Arbitration should not have dealt with the case at all. WTO judges saw things differently: It must be objectively examined whether the reasons for a government to impose measures to protect national security are covered by WTO rules. This was not the case.

US Appellate Body blocks

Plaintiff countries are now entitled to compensation. The United States can formally appeal the decision—however, it has for years obstructed the appointment of new members to the Appellate Body, so that appointment negotiations cannot take place at all at this time. After which the appeals remain unresolved.

The current US administration led by Joe Biden has criticized the WTO decision. The organization has no right to question the national security decisions of its members. However, the United States has already reached new agreements with the European Union, Japan and Great Britain. After that, tariffs will largely disappear and be replaced by import quotas. In return, retaliatory tariffs on US imports were removed.

Despite the WTO’s decision, the US government has no intention of adjusting its tariffs, reports Reuters news agency. In a first reaction, the Chinese government said it hopes the United States will respect the decision and adjust its tariffs as soon as possible and cooperate with China and other members of the World Trade Organization.