China had no right to hit U.S. exports – including farm commodities — with retaliatory tariffs five years ago in response to U.S. steel and aluminum tariffs, according to a ruling Wednesday by a World Trade Organization dispute panel.
China “acted inconsistently” by imposing $3 billion worth of retaliatory tariffs that ranged from 15-25% on U.S. goods such as pork, oranges, walnuts, grapes, almonds, dairy and broccoli, the WTO panel said in the ruling.
The 15% tariff China placed on U.S. table grapes, for example, pushed import taxes from 13% to 28%. Subsequent tariff shifts pushed the Chinese tax up further to 58% and U.S. table grape exports to China immediately plunged.
The WTO ruling Wednesday was immediately lauded by the Biden administration.
“The United States is pleased with the World Trade Organization panel report released today, recognizing that the U.S. Section 232 actions on steel and aluminum are security measures, and (China) illegally retaliated with sham ‘safeguard’ tariffs,” the Office of the U.S. Trade Representative said in a statement.
The U.S., seeking to curb gluts of steel and aluminum on the international market that resulted primarily from Chinese overproduction, imposed tariffs on steel and aluminum imports from China, the European Union, India, Canada, Mexico, China, Turkey and Russia.
Each country threatened or implemented retaliatory tariffs, and the U.S. disputed those retaliatory tariffs at the WTO. American negotiators have since reached agreements with Canada, Mexico, the EU, the UK and, most recently, India.
It was the Trump administration that used Section 232 of the U.S. Trade Expansion Act of 1962 to hit China and others with a 25% duty on steel and a 10% duty on aluminum, but U.S. Trade Representative Katherine Tai said she supports the tariffs and would be willing to use Section 232 again.
“The steel and aluminum tariffs that have really roiled our economy were necessary to address a global overcapacity problem, driven largely but not solely by China,” Tai told the Senate Finance Committee in a hearing last year.
Indian Prime Minister Narendra Modi announced in June that he had agreed to eliminate the country’s retaliatory tariffs on chickpeas, lentils, almonds, walnuts and apples.
WTO panels continue separately to review U.S. complaints against retaliatory tariffs from Turkey and Russia, according to a Geneva official.
China can appeal the Wednesday ruling against its retaliatory tariffs on U.S. goods, but the WTO’s appellate system is not functioning because the U.S. continues to refuse to approve new appeals court judges.
The Wednesday ruling will likely be officially adopted by the WTO’s Dispute Settlement Body in 20-60 days, but any appeal “would be delayed for the foreseeable future due to the current nonfunctioning of the Appellate Body,” a Geneva official said.
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