WTO Panel Rules In United States’ Favor In Section 232 Dispute With China
On August 16, a three-person World Trade Organization (WTO) panel ruled in the U.S. government’s favor in a dispute with China regarding the United States’ Section 232 tariffs on steel and aluminum. The U.S. government lodged the complaint after China imposed $2.4 billion in retaliatory tariffs on several U.S. products in reaction to the Trump administration’s decision to impose 10 percent penalties on all imported aluminum and 25 percent penalties on all steel imported into the United States.
The WTO panel found China’s tariffs breached the WTO’s “most favored nation” principle, which mandates WTO members must treat each other impartially or offer trade concessions as compensation. The three-person panel also recognized that the United States was aiming to protect its national security interests when it imposed the Section 232 duties.
The ruling is not final, however. The Chinese government has two months to decide whether to appeal to the WTO’s appellate body, which is currently inactive due the fact that the U.S. government blocked the appointment of members to that panel.
A representative from the Office of the U.S. Trade Representative (USTR) praised the ruling. USTR spokesperson Sam Michel also said, “The United States condemns China’s refusal to correct its severe and persistent non-market excess capacity for steel and aluminum that is at the heart of a global crisis that led to the U.S. Section 232 national security actions.” China’s Commerce Ministry demanded the United States immediately lift its Section 232 tariffs.
Read the WTO’s decision here.
As a reminder, when it comes to the Section 232 steel and aluminum tariffs, Connecting the Dots is reporting this development for members’ information only.
MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets. To address this circumvention, MSCI has advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA). MSCI also asked that Canada and Mexico be excluded from any trade penalties.
Click here to review all of MSCI’s advocacy on Section 232 tariffs.