A World Trade Organization (WTO) panel ruled Tuesday that tariffs that US President Donald Trump has leveled against more than $200 billion worth of Chinese goods are inconsistent with certain provisions of the General Agreement on Tariffs and Trade (GATT) 1994.
The trade dispute began in June 2018 when the US placed a 25 percent tariff on $34 billion worth of Chinese goods, allegedly in response to China’s practices around technology transfer, intellectual property and innovation, which the US claims amount to extensive intellectual property theft. In September 2018 the US imposed a further 10 percent tariff on $200 billion worth of goods, which was subsequently raised to 25 percent in May 2019. The Trump administration issued the tariffs under the authority of Section 301 of the Trade Act of 1974, which allows the president to “impose duties or other import restrictions” if he finds that a foreign government “engages in discriminatory or other acts or policies which are unjustifiable or unreasonable and which burden or restrict United States commerce.”
The panel found that the US had not demonstrated a genuine relationship between its means and ends, in that the US did not adequately demonstrate that the goods subject to the tariffs were also the goods that the US claims benefit from alleged Chinese misappropriation of its intellectual property. In response, US Trade Representative Robert Lighthizer condemned the report, saying: “The United States must be allowed to defend itself against unfair trade practices, and the Trump Administration will not let China use the WTO to take advantage of American workers, businesses, farmers, and ranchers.”
The US can appeal the decision to the WTO’s appeals court, which is non-functional because an appeal must be heard by three members of the seven-member court, and currently there is only one member of the court.