Please ensure Javascript is enabled for purposes of website accessibility

WTO Rules $200 Billion in Trump's Tariffs on China Illegal

By Rich Smith – Updated Sep 15, 2020 at 3:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Levies ranging from 10% to 25% on Chinese goods are in dispute.

For years, the Trump Administration has waged an on-again, off-again (but mostly on-again) trade war against the Chinese government. Among other sanctions targeting the communist government for everything from domestic human rights abuses to international cyberhacking, intellectual property theft, and commodities dumping, the administration has levied punitive tariffs on hundreds of billions of dollars worth of Chinese goods imported into the U.S.

But now the Trump Administration may need to rethink those tariffs, reports the AP -- or it may not.  

Two fists meet, one emblazoned with Chinese flag and one with U.S. flag

Image source: Getty Images.

Responding to Chinese complaints regarding the tariffs, which range in size from 10% to 25% of the value of the products imported, a World Trade Organization (WTO) panel on Tuesday ruled that at least $200 billion worth of U.S. tariffs on Chinese goods are illegal. Technically, as a result of this ruling, the WTO may authorize China to levy retaliatory tariffs of its own against the U.S., until the American tariffs are retracted.

Practically though, the WTO's decision may have little effect. For one thing, the Chinese government has already levied tariffs in response to the U.S. tariffs, long before WTO authorization was granted. For another, the U.S. is expected to appeal the WTO's decision.

And for a third, thanks largely to the Trump Administration's refusal to approve new members nominated to fill seats on said appeals court (which is supposed to have seven judges, and needs three to issue a ruling ... but has just one judge sitting, as of July), the court isn't actually able to function. It presently cannot issue final rulings on matters appealed to it.  

All of this leaves the U.S. and China at an impasse. With the WTO unable to issue final rulings on their disagreement, both parties are free to levy tariffs and other sanctions as they see fit, and unrestrained.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.