The World Trade Organization (WTO) has found the United States' additional ad valorem duties on certain products imported from China to be in violation of various articles of the 1994 General Agreement on Tariffs and Trade.
Specifically, China disputed the following additional ad valorem duties imposed by the United States:
- additional ad valorem duties of 25%, imposed on 20 June 2018 on a list of 818 tariff subheadings with an approximate annual trade value of USD 34 billion of products imported from China, as of 6 July 2018 (List 1); and
- additional ad valorem duties, imposed on 21 September 2018 on a list of 5,745 tariff subheadings with an approximate annual trade value of USD 200 billion of products imported from China, as of 24 September 2018 (List 2).
List 2 set the rate of additional ad valorem duties at 10% until the end of the year, and announced that the rate of additional duties would increase to 25% on 1 January 2019. The increase in the rate of additional duties was postponed twice, but eventually took effect on 10 May 2019.
The WTO rejected the United States' argument that the tariffs were applied to products it said had benefitted from practices that the United States considered to be contrary to "public morals," like theft, misappropriation and unfair competition. Ultimately the WTO found that the United States had not met its burden of demonstrating how its restrictions contributed to protecting its public morals and how they did not extend beyond what was necessary.
To read the full report of the panel issued by the WTO see WT/DS543/R.