WTO Warns China It May Impose Retaliatory Tariffs Against the US

[Image source=AP Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] The World Trade Organization (WTO) has ruled that China can impose "retaliatory tariffs" on U.S. measures that imposed tariffs on Chinese products. However, since only a portion of the amount originally requested by China was accepted, it remains uncertain whether China will actually impose the tariffs.

On the 26th (local time), the WTO arbitrator decided that China can impose retaliatory tariffs on U.S. imports worth $645 million (approximately 774 billion KRW).

In 2012, China filed a complaint with the WTO after the U.S. imposed countervailing tariffs on 22 Chinese manufactured goods, including solar panels, citing government subsidies. In 2014, the WTO found that the evidence provided by the U.S. to prove the subsidies was insufficient and that there were errors in the subsidy calculation process, and requested the U.S. to rectify the situation.

Subsequently, in 2019, China requested the WTO to authorize retaliatory measures on U.S. imports worth $2.4 billion (approximately 2.88 trillion KRW) annually, claiming that the U.S. was not complying with the WTO's decision. The WTO made this ruling accordingly. Bloomberg News described it as "the WTO granting China a new 'tariff weapon.'"

The U.S. immediately protested. Adam Hodge, spokesperson for the U.S. Trade Representative, said in a statement, "This is a disappointing decision," adding, "It is a misinterpretation that makes it difficult for WTO members to protect their workers and businesses from China's subsidies that distort trade."

However, since only about one-quarter of the amount originally requested by China was accepted, the economic benefits China can gain through retaliatory tariffs are limited. Rather, implementing them could only escalate tensions between the two countries. In fact, the WTO also allowed China in 2019 to impose retaliatory tariffs on U.S. imports worth up to $3.6 billion (approximately 4.32 trillion KRW), but China has not yet notified that it has implemented them.