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U.S. fights back after China, EU turn to WTO over tariffs

Jul 17, 2018

WASHINGTON, U.S. – In a brazen attack on allies that have been miffed with the U.S. for over a month now, after Washington imposed steep tariffs on imported steel and aluminum – the Trump administration clarified that it is more than willing to fight back. 

On Monday, the Trump administration brought cases against China, the European Union, Canada, Mexico and Turkey at the World Trade Organization for retaliating against U.S. metal tariffs.

Claiming that imported metals pose a threat to its national security, the U.S. imposed tariffs of 25 percent on steel and 10 percent on aluminum on some countries in March this year, and on other nations in June. 

Trump, at the time, imposed the tariffs using the Trade Expansion Act of 1962, under which, presidents are empowered to impose unlimited tariffs on imports that the Commerce Department asserts are threats to America’s national security.

What further made the tariffs a complicated matter for nations facing these taxes was that the WTO gives countries broad leeway to determine national security interests. 

The action hit longtime U.S. allies the most, who tried to first lobby the U.S. President Donald Trump into rethinking his imposition – which many of these nations feared could trigger a global trade war.

Allies then offered to negotiate and sought mutually beneficial terms. 

However, when everything failed, China, the EU, Canada, Mexico and Turkey slapped retaliatory tariffs on more than $24 billion worth of U.S. exports.

For weeks now, the Trump administration has threatened to take action against any country that retaliates against its steep metal tariffs. 

On Monday, putting the threats into action, the U.S. Trade Rep. Robert Lighthizer alleged that their retaliation violates the rules of the Geneva-based WTO, which mediates trade disputes.

In a statement, Lighthizer said, “These tariffs appear to breach each WTO member’s commitments under the WTO Agreement. Instead of working with us to address a common problem, some of our trading partners have elected to respond with retaliatory tariffs designed to punish American workers, farmers and companies.”

The U.S. Commerce Department is also pursuing another, bigger national-security case against auto imports and reports confirmed that hearings on the proposed auto tariffs are set for Thursday and Friday in Washington.

Further, Trump has launched an all out trade war with China over what it alleges are aggressive tactics that Beijing has used to challenge U.S. technological dominance. 

The Trump administration claims these tactics include outright cybertheft and forcing U.S. companies to hand over trade secrets in exchange for access to the Chinese market.

Earlier this month, the Trump administration added 25 percent tariffs on $34 billion worth of Chinese goods, after which, Beijing responded by increasing taxes on the same amount of American imports.

Then, last week, America moved beyond industrial goods and announced 10 percent tariffs on $200 billion worth of Chinese consumer products – a move that is set to take effect by September. 

Subsequently, on Monday morning, China announced that it is disputing those proposed tariffs in a WTO complaint.

The same evening, Washington escalated its trade dispute with closest allies by challenging the countries at the WTO.

Lighthizer declared in his statement on Monday, “The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors.”

His office also argued that the tariffs imposed by the U.S. “are justified under international agreements the United States and its trading partners have approved.” 

However, in their separate cases over the same tariffs, trading partners have argued that by citing national-security concerns, the U.S. is using a phony rationale for imposing tariffs affecting politically favored U.S. industries.

According to analysts, tariff-related cases brought by countries to the WTO could take as long as three years to resolve. 

They further pointed out that the burden of these disputes may weigh heavily on the 164-country body.

Further, some analysts have warned that if the U.S. loses the cases and doesn’t remove tariffs, the countries that brought the cases could be authorized by the WTO to impose tariffs on U.S. goods.

Meanwhile, in response to Washington’s WTO action, Mexico warned that it would defend its retaliatory measures, saying the imposition of U.S. tariffs was “unjustified.”

Mexico’s Economy Ministry said in a statement, “The purchases the United States makes of steel and aluminum from Mexico do not represent a threat to the national security. On the contrary, the solid trade relationship between Mexico and the U.S. has created an integrated regional market where steel and aluminum products contribute to the competitiveness of the region in various strategic sectors, such as automotive, aerospace, electrical and electronic.”

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