What The WTO Ruling Against U.S. Section 232 Tariffs Means
On Friday, December 9, the World Trade Organization (WTO) ruled the Section 232 national security-related tariffs on steel and aluminum put into place by former U.S. President Donald Trump, and still in effect for imports from most countries, violate global trade rules.
As Politico noted, the ruling came despite the fact that Article 21 of the WTO’s foundational document, the General Agreement on Tariffs and Trade, allows member countries to take actions that violate WTO commitments if it is for purposes of protecting that country’s own national security.
Despite that outcome, Bloomberg says the ruling is “unlikely to impact” U.S. metal producers. That is because the United States can lodge an appeal to the ruling, but the WTO cannot hear the appeal since, in 2019, the Trump administration effectively acted to paralyze the appellate body.
Connecting the Dots is reporting the results of this case for members’ information only.
As a reminder, 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, in 2017 MSCI 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.
In the face of last week’s WTO ruling, the Biden administration pledged it would not remove the Section 232 penalties. It also strongly condemned the decision, saying it provided additional proof that the WTO dispute settlement system needs to be reformed. “The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement and the WTO has no authority to second-guess the ability of a WTO member to respond to a wide-range of threats to its security,” said USTR spokesperson Adam Hodge.
As Politico noted, there are more decisions stemming from President Trump’s steel and aluminum action to come since the Trump administration also had filed counter complaints challenging several countries’ retaliatory actions to the Section 232 penalties. Arrangements with Canada, Mexico, and the European Union resolved some of those cases, but others involving China, Russia, India, and Turkey are still pending.