Trump tariffs undermine trust in rules-based global commerce
GENEVA (AP) — The Trump administration's move to impose tariffs on countries like China undermines the rules-based system of global commerce that the United States itself helped create after World War II, experts and trading partners say.
Those rules are embodied and overseen by the World Trade Organization, which now sees its authority challenged and possibly diluted by the U.S. government's move to create tariffs without prior consultations – posing a threat to a trade architecture meticulously built up over decades.
"There is genuine systemic risk," said Joseph Francois, the managing director of the World Trade Institute at the University of Bern, Switzerland. "One could argue [I certainly do] that overall, the multilateral system has been a good thing for the U.S., and trashing it will not lead to a better outcome."
"It will lead to quite the opposite," added Francois, a former acting director of economics for the U.S. International Trade Commission who has worked with the WTO.
President Donald Trump is imposing new tariffs of 25 percent on imported steel and 10 percent on aluminum. He exempted some countries pending negotiations and gave the immediate green light for others, like China.
In a separate case, he also ordered tariffs on about $60 billion of Chinese goods, again bypassing WTO arbitration.
But in a sign that he will still turn to the WTO when it suits his interests, Trump had his government file a complaint through the organization to try to stop China from allegedly stealing technology from U.S. companies that operate there.
In applying the steel and aluminum tariffs, Trump's main concern is that China has for years overproduced steel and aluminum, depressing prices globally and causing job losses in other countries, like the U.S. but also in Europe.
Usually, a country would file a complaint through the WTO to have another country rein in their industry. The risk now is that other countries might likewise sidestep the WTO and slap their own tariffs in retaliation, further undermining the WTO.