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WTO Ruling Reignites U.S.-China Trade Spat

  • A WTO ruling on Trump-era import tariffs has reignited old tensions between the U.S. and China.
  • The WTO ruled that the 25% taxes on global steel imports and 10% import tariffs on aluminum imposed under former US President Donald Trump violated their rules.
  • That was enough for China, the most affected party, to lambast the US for its “protectionist policies.”

By AG Metal Miner

In the latest US steel news, a WTO ruling has sparked a new war of words between the United States and China. Last weekend, the WTO finally ruled on the 25% taxes on global steel imports and 10% import tariffs on aluminum imposed under former US President Donald Trump. The WTO dispute settlement panel ruled that these taxes violated their rules.

That was enough for China, the most affected party, to lambast the US for its “protectionist policies.” They also asked the country to correct its wrongdoings and work with China and other WTO members to safeguard the multilateral trading system. However, the Biden administration clarified it would not remove the tariffs imposed by the previous government, much to the cheer of US steel mills.

More Drama Behind the Scenes

China’s response to the WTO ruling was hardly surprising. However, a report in The New York Times regarding US steel news may hold the key as to why it was so harsh. Many believe it was partly due to a proposal by the Biden administration from early December. Addressed to the European Union (EU), it called for the creation of an international consortium that would promote trade in metals produced with fewer carbon emissions. At the same time, it would impose tariffs on steel and aluminum from China and their nations.  

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According to media reports, Chinese experts referred to the US as having a “selfish and arrogant attitude.” They added that this was more proof that the Biden administration had not abandoned the “America First” policy that they claim have seriously disrupted the functioning of the global trading system. China also called on other countries to put tariffs on US exports if the latter refuses to comply with the WTO ruling.

The US has indeed imposed tariffs on steel and aluminum imports from certain WTO members under “national security concerns” since 2018. The Biden administration has embraced the previous administration’s trade laws. Moreover, foreign relations experts say it would never allow such a ruling to edit its national security policy.

More US Steel News Sure to Come as Trade War Heats Up

According to the Associated Press, the WTO’s decision was likely to have little real-world impact. Indeed, an appeal by the United States would languish because the WTO’s Appellate Body hasn’t functioned for three years. This is largely the result of the US blocking the appointment of new judges to the panel.

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The report also stated that the Biden administration had already reached agreements with the EU, Japan, and the United Kingdom to replace the tariffs with import quotas. In return, the trading partners removed their own retaliatory tariffs against the US.

While this may sound like a stalemate, the next battle-front in the US-China trade war has already opened. The provocation? The US’ “green tax” proposal. According to the New York Times, the concept paper drafted by the Office of the United States Trade Representative hinted at the new type of trade arrangement.

The proposed group would be known as the Global Arrangement on Sustainable Steel and Aluminum. Its job would be to bolster domestic industries in the US and Europe to mitigate the fallout from climate change. To accomplish this, those countries would jointly impose a series of tariffs against metals produced in environmentally harmful ways.

The taxes directly target China and other countries that have not joined the group. Those who did sign up would enjoy more favorable trade terms among themselves, especially for cleaner steel and aluminum.

By Sohrab Darabshaw

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