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TWN
Info Service on WTO and Trade Issues (Feb25/03) Bangalore, 5 Feb (D. Ravi Kanth) — China has hit back against the unilateral tariffs imposed by the Trump administration by imposing tariffs on $14 billion worth of American goods as well as other measures against select US companies on 4 February, in a seemingly strategic response by Beijing against Washington’s allegedly illegal trade measures. Through its latest action against American goods and companies, Beijing appears to have delivered a powerful message to the Trump administration that it will not sit idly by if Washington chooses to impose its allegedly illegal and unjustified measures. In addition to the tariffs and antitrust investigations into Google, Nvidia and Intel, China has also chosen to initiate dispute settlement proceedings at the World Trade Organization against the 10% additional tariffs on all Chinese goods announced by the Trump administration on 1 February. Although a formal complaint by China has yet to be posted on the WTO’s website, the Chinese commerce ministry has confirmed that it has initiated a trade dispute against the US at the WTO, according to media reports. By choosing to take what it considers to be appropriate actions against the Trump administration, China has apparently secured some leverage ahead of talks between US President Donald Trump and Chinese President Xi Jinping sometime this week. Unlike Washington, which has chosen to impose a 10% tariff on all Chinese goods that came into effect on 4 February, China said that its additional tariffs covering several strategically-chosen American goods, will come into effect on 10 February, according to statements made by the Chinese finance ministry and the ministry of commerce. China has indicated that it would impose a 15% tariff on imported coal and liquefied natural gas originating from the US. Beijing also stated that it would impose 10% additional tariffs on crude oil, agricultural machinery, automobiles with large displacement, and pickup trucks, according to China’s Customs Tariff Commission. ANTITRUST ACTIONS Furthermore, China has revived antitrust investigations into Google and Nvidia, as well as a new investigation into Intel, according to China’s State Administration for Market Regulation. A news report in the Financial Times on 5 February quoted Chinese academic Liu Xu of Tsinghua University as saying that the investigations into tech-companies “may be part of the retaliatory measures”. The unilateral imposition of tariffs by the US seriously violates the WTO rules, and not only fails to address its own problems but also undermines normal economic and trade cooperation between China and the US, according to China’s Customs Tariff Commission of the State Council. Beijing has launched several trade disputes against the US at the WTO in the recent past. For example, during the Biden administration, China had initiated disputes against the US over certain tax credits under the US Inflation Reduction Act, and US measures on certain semiconductor and other products, as well as three separate disputes over US tariff measures on certain goods from China. China’s Ministry of Commerce (MOFCOM) on 4 February stated that it has filed a case with the WTO dispute settlement mechanism to defend its legitimate rights and interests after the US announced that it will impose 10% additional tariffs on Chinese goods. “A ministry spokesperson said the US tariff hikes on Chinese exports seriously violate WTO rules, are malicious in nature, and a typical example of unilateralism and trade protectionism,” according to a news report in the Global Times, a Chinese newspaper, on 4 February. However, there is unlikely to be any resolution of the recent Chinese disputes initiated against US tariffs and other measures because of a dysfunctional Appellate Body since December 2019. Consequently, the latest dispute raised by China against the Trump administration’s 10% tariff hike on Chinese goods may not result in any remedial relief, and may only remain as a symbolic move, said people familiar with the dispute. The Trump administration is seeking to impose a “global supplemental tariff”, as stated in its “America First Trade Policy” that was issued on 20 January. DE MINIMIS PROVISION Besides the 10% tariffs imposed on Chinese goods, the US on 4 February suspended shipments from China that take advantage of the de minimis provision, which allows packages valued at $800 or less to enter the US duty- free. Several Chinese e-commerce companies like Shein and Temu use the de minimis provision to sell their Chinese- manufactured products in the US market. House Ways and Means Committee Chairman Jason Smith of the Republican Party said this means that China can no longer avoid paying tariffs by shipping packages with relatively low values. “The effect of increased abuse of the de minimis privilege has been to deny the US government collection of billions of dollars in additional revenues while unfairly disadvantaging American manufacturers,” Smith said, according to media reports. Aside from imposing allegedly unilateral tariffs on goods from other countries, the US has also used Section 301 of the Trade Act of 1974 to impose tariffs to allegedly address foreign trade barriers. Significantly, the enforcement mechanism of the US-China “Phase One” agreement struck by the Trump administration with China during its first term in office included a provision which states that “the Appeal and information and matters related to it are confidential and shall not be shared beyond the bilateral evaluation and Dispute Resolution Office.”
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