Trump trade setbacks show US policy in global negative light
- World Trade Organization ruling and Canadian response to US aluminium tariff illustrate how unilateralism is pushing against its limits and only appreciated by the president and his fellow White House hawks
With the latest ruling of the World Trade Organization against the United States, China has scored a symbolic victory. But for now, the decision will have no immediate impact on Donald Trump’s trade war on China. If anything, it will increase his administration’s animosity towards the trade body and further erode its support for a global rule-based trading system.
Already US Trade Representative Robert Lighthizer has blamed the WTO for failing to hold China accountable with the ruling. The three-member panel of the WTO’s dispute settlement body found the US flouted its commitments under global trading rules when it imposed levies on US$360 billion of Chinese imports more than two years ago.
The ruling will not deter US customs from collecting the levies from American importers, but it does weaken Trump’s claims against China’s alleged unfair trade practices and dent diplomatically the unilateralism of his “America first” trade policy.
Interestingly, the WTO news came almost the same time as the White House unilaterally abandoned a tariff on aluminium from Canada imposed less than a month ago. It came after Chrystia Freeland, the Canadian deputy prime minister, vowed a “dollar for dollar” response in any retaliatory tariffs.
The White House tried to put on a brave face, claiming it expected Canada to decrease its supplies. Freeland quickly retorted by saying there had been no negotiations and no quotas on aluminium had been agreed to.
Washington needs to wake up to the reality that when you impose trade penalties, the other side will retaliate. Meanwhile, Hong Kong has formally demanded Washington drop new regulations requiring locally made products shipped to the US to be labelled “Made In China”.
The city has a strong case should it decide to take it up with the WTO. It’s hard to think of a US measure that does more harm to a long-standing trading partner while getting no benefit for itself.
While Trump’s hawkish stance on trade has endeared many in Washington, it has not found much support within the US business community.
The US Aluminum Association, an industry lobby group, endorsed the decision to drop the tariffs, calling them “disruptive and unnecessary”. The US Chamber of Commerce has been critical of the administration’s tariff diplomacy, including that on China trade.
All eyes are now on the November presidential election. While there is no guarantee a Joe Biden presidency will be any less hawkish towards China, he is on record far more supportive of efforts to enhance an international trade regime.
What the latest trade setbacks for Trump have shown is that US unilateralism is pushing against its limits and is not seen in a positive light by people other than the president and his fellow hawks.
