The WTO has authorised China to impose $645m of compensatory tariffs against the US in response to anti-subsidy tariffs on Chinese products – ranging from solar panels to steel wire.
The case dates back to 2012 (when Barack Obama was US president) and centres on whether the US could regard Chinese firms in which the government owns a majority stake as being state-controlled.
Reuters reports that China had initially asked the three-person WTO panel to award it the right to impose tariffs on $2.4bn of US goods.
Chad Bown, a senior fellow at Peterson Institute for International Economics, told the WSJ that if China implements the tariffs it would risk “re-initiating a tariff escalation of the US-China trade war, that is now in a fragile state of truce”.
The decision comes as the Biden administration begins conversations with some WTO members to overhaul the WTO, which has struggled to forge new trade deals and settle disputes among its members.
Meanwhile, the EU has launched a WTO case against China over “discriminatory trade practices” against EU member state Lithuania.
Beijing has blocked most trade with Lithuania after the Baltic state deepened ties with Taiwan, reports Politico.
“Launching a WTO case is not a step we take lightly. However, after repeated failed attempts to resolve the issue bilaterally, we see no other way forward than to request WTO dispute settlement consultations with China,” European trade commissioner Valdis Dombrovskis said.