The World Trade Organization (WTO) has determined that the steel and aluminum import tariffs imposed by the United States under former President Donald Trump violate international trade regulations.
Mr. Trump cited national security reasons when announcing the increased border levies in 2018, igniting a tidal wave of international trade disputes.
The WTO rejected this argument, stating that the duties were not imposed “during a war or other emergency.”
The United States stated that it stood by the tariffs.
Assistant US trade representative Adam Hodge stated that the U.S. “strongly disagrees” with the verdict and has no plans to remove the sanctions.
“The Biden administration is committed to safeguarding U.S. national security by assuring the long-term survival of our steel and aluminum industries,” he said, adding that the revelations “only underscore the need to overhaul the WTO dispute settlement system fundamentally.”
“The United States has held the clear and unequivocal stance, for over 70 years, that questions of national security cannot be considered in WTO dispute settlement and the WTO has no jurisdiction to second guess the competence of a WTO member to respond to a wide range of threats to its security,” he added.
The plaintiffs were China, Norway, Switzerland, and Turkey.
broader repercussions
The WTO advised the United States to conform to its trade policy. Under WTO regulations, the nations who filed the complaints have the right to apply retaliatory tariffs on the United States if it does not comply with the ruling.
The United States may also appeal. This would leave the case in limbo, as the United States has blocked appointments to the WTO’s appellate panel, which hears appeals, for years, rendering it ineffective.
China stated in a statement that it hoped the United States would respect the ruling and correct its policies “as soon as possible,” while Switzerland’s economic affairs secretariat stated that the WTO report confirmed that countries had broad discretion to protect security interests “provided that they meet certain minimum requirements.”
The Norwegian Ministry of Foreign Affairs did not answer a follow-up inquiry. It stated in a statement that it has filed the lawsuit to “avoid protectionism… so as not to damage the rules-based, global trading system.”
Experts in international trade stated that the dispute’s ramifications for the increasingly unstable agreement on how to control global trade were more significant than its practical consequences.
“In the current atmosphere of escalating geopolitical tensions, countries are more likely to invoke the national security exception,” stated Chad Bown, a global trade expert at the Peterson Institute for International Economics (PIIE).
This particular judgment has significance not just for the future policies of members, but also for their overall support of the WTO system.
In 2018, Mr. Trump announced 25% tariffs on steel and 10% levies on aluminum, alleging unfair competition and national security concerns.
The charges, which have the support of labor unions representing US steelworkers, have already been drastically reduced compared to what was initially announced when even shipments from close North American friends were at risk of being affected.
Mr. Trump made agreements exempting certain nations from tariffs or allowing their imports up to a certain threshold.
To improve relations with friends, the Biden administration struck similar accords with the European Union, Japan, and the United Kingdom, but maintained full tariffs for all other nations.
Though the tariffs angered allies and raised concerns among US manufacturers that use metals about increased costs, the US stated that they were primarily aimed at China, which for years has been accused by other nations of selling its steel abroad at below-market prices due to unfair government subsidies.
This week, the office of the US trade representative issued the European Union a proposal detailing a new strategy for shaping the global steel and aluminum markets.
The objective is to encourage commerce in metals produced in a manner that minimizes carbon emissions and to levy tariffs on metals regarded to cause excessive pollution.
Although the specifics of how such a plan would operate have not yet been disclosed, China would likely be subject to taxes when attempting to sell metals to signatory nations.
Trade between the world’s two largest economies has been adversely affected by the trade war between the United States and China, which was in part precipitated by metals tariffs.
Mr. Trump and Chinese President Xi Jinping’s announcement of a prominent trade pact for 2020 served to alleviate some of the public anxiety surrounding the issue.
According to the PIIE, nearly two-thirds of the items China exports to the United States are still subject to additional taxes, as are around 58% of the goods the United States sells to China.
