China to file lawsuit at WTO against U.S. tariffs

China to file lawsuit at WTO against U.S. tariffs

China will file a lawsuit with the World Trade Organization (WTO) and take necessary countermeasures to safeguard its own rights and interests, the Ministry of Commerce (MOFCOM) said, after the United States announced it would impose a 10% additional tariff on goods from China. The Ministry said this move fails to solve the problems faced by the U.S., and undermines normal economic and trade cooperation between the two countries. An expert from a think tank in Beijing said the decision is expected to have a significant impact on U.S. and Chinese industries. “The unilateral imposition of tariffs by the U.S. seriously violates the rules of the WTO. We urge the U.S. to objectively and rationally view and handle its own fentanyl crisis and other issues, rather than resorting to tariff threats against other countries,” the Ministry said in a statement.

Zhou Mi, Researcher at the Chinese Academy of International Trade and Economic Cooperation, said a higher tariff on Chinese goods will likely result in higher costs of importing products from China, and this cost may be further amplified along the supply chain. “For U.S. manufacturers, when they import intermediate materials or products from China, the costs of those products will increase, and the price increase will be transmitted along the layers of the supply chain. U.S. consumers could face price inflation on certain products of over 10%,” Zhou said. He added that Chinese exporters could also face a significant challenge, as U.S. importers may need to renegotiate additional costs with Chinese companies.

The Foreign Ministry said in a statement that China has expressed strong dissatisfaction and resolute opposition to the latest move, and will take necessary countermeasures to firmly safeguard its legitimate rights and interests. There are no winners in trade disputes, and China’s stance is consistent and firm. The U.S. has levied a 10% tariff on Chinese imports under the pretext of the fentanyl issue. The Foreign Ministry said fentanyl is a problem of the U.S., and China has been among the countries with the strictest and most thoroughly enforced narcotics control policies in the world. In a humanitarian spirit, China has provided support to the U.S. in dealing with its fentanyl problem. “China urges the U.S. to correct its wrong practices, maintain the hard-won progress of China-U.S. drug control cooperation, and promote stable, healthy and sustainable development of China-U.S. relations,” the Foreign Ministry said in the statement.

The latest move comes after a year of robust foreign trade between U.S. and China. In December alone, U.S. seaports handled an equivalent of 451,000 40-foot containers of goods from China, up 14.5% year-on-year, with some companies stockpiling goods early to get ahead of tariff threats. Last year, U.S. imports of machinery, bedding, plastic toys and other products from China rose 15% over 2023, trade data supplier Descartes Systems Group said. Since 2018, the original round of tariffs imposed on China by the first Trump Administration and those kept and extended by then President Joe Biden’s Administration, have caused a significant impact. The Peterson Institute for International Economics in Washington DC, found that in 2018, the two-way trade between China and the U.S. was USD659 billion. In 2024, the figure declined to USD578 billion, the China Daily reports.

The South China Morning Post added that according to President Trump's executive order, the tariffs would be removed if the U.S. Secretary of Homeland Security and the President agreed that China had taken “adequate steps” to alleviate the opioid crisis. Fentanyl is a powerful synthetic opioid that has caused hundreds of thousands of deaths in North America. The White House also referred to China’s “intellectual property theft, forced technology transfer, and other unreasonable behavior”, as well as illegal immigration, “including a rising number of Chinese nationals and people on the terror watch list”. In a statement, the Chinese Ministry of Foreign Affairs reaffirmed Beijing’s efforts to control the illegal production of fentanyl. “China and the U.S. have engaged in extensive anti-drug cooperation, yielding significant and widely recognized results.” China's Ministry of Foreign Affairs called the tariffs “unconstructive”, saying they would “inevitably impact and undermine” future cooperation between the two sides on drug control. In August 2022, Beijing cut off its cooperation on fentanyl and other drug controls in retaliation against then-U.S. House speaker Nancy Pelosi’s visit to Taiwan. The cooperation did not resume until late 2023.

Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management, said the 10% tariffs signed off by Trump were “not a big shock to China’s economy”. “It’s unlikely to change the market’s expectations of China’s macro outlook this year, which have already factored in higher tariffs from the U.S.,” Zhang said. The tariffs on China are also well below the 60% import duties Trump threatened to enact at various points in the presidential campaign last year. Alicia Garcia-Herrero, Chief Economist for the Asia-Pacific region at Natixis, said that Trump was “setting the tone to negotiate with China”. While the move put pressure on China, the tariff rate was lower than the 25% Trump plans to impose on Mexico and Canada, which are part of the United States-Mexico-Canada Agreement.