US tariffs on Chinese goods worth $200bn ruled illegal by World Trade Organisation

While the ruling would theoretically allow retaliatory tariffs on billions worth of US goods, it is unlikely to have any practical impact in the short term

Tariffs imposed on China during Donald Trump’s trade war violated international trade rules, a World Trade Organisation panel ruled on Tuesday.

The WTO panel said tariffs on $200bn worth of goods were illegal because they only applied to products from China and the US had not shown the products benefited from unfair practices including intellectual property theft and technology transfer, according to the Associated Press.

While the decision would theoretically allow China to impose tariffs on US goods in retaliation, in practice they would be unable to respond as the ruling could be appealed to a court that is not currently operating.  

The Trump administration has blocked new appointments the WTO’s appeals court, rendering it unfunctional, so it can’t make the final ruling required for the panel’s decision to be binding.

Robert E Lighthizer, the United States Trade Representative, said the US must be allowed to defend itself against unfair trade practices that take advantage of American workers, businesses, farmers and ranchers.

“This panel report confirms what the Trump administration has been saying for four years: the WTO is completely inadequate to stop China’s harmful technology practices,” Mr Lighthizer said in a statement.  

“Although the panel did not dispute the extensive evidence submitted by the United States of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct.”

In September 2018, the US imposed duties of 10 per cent on $200bn worth goods before increasing them to 25 per cent eight months later. In June 2018, 25 per cent duties were imposed on Chinese goods worth $34bn, the AP reported.

They were justified under Section 301 of the Trade Act of 1974, with the US arguing China’s actions were a form of “state-sanctioned theft” and “misappropriation” of technology, intellectual property and commercial secrets.