A World Trade Organization panel ruled Tuesday that Trump administration tariffs on $200 billion worth of Chinese goods are illegal, vindicating Beijing even if the United States has all but incapacitated the WTO's ability to hand down a final, binding verdict. It also claimed the Trump administration had violated a dispute-resolution provision that requires countries to appeal to the WTO to settle disputes before slapping retaliatory tariffs on another country.
Trump has repeatedly criticized the WTO, which oversees global disputes on trade, for allegedly treating the USA unfairly.
A panel of three WTO trade experts said in its report "that the United States had not met its burden of demonstrating that the measures are provisionally justified".
The panel added that it had only looked into the USA measures and not China's retaliation, which Washington has not challenged at the WTO.
The appeals court issues final rulings in trade cases and stopped functioning previous year when the terms of two of its last three judges expired with no replacements.
"This panel report confirms what the Trump administration has been saying for four years: The WTO is completely inadequate to stop China's harmful technology practices", said USA trade representative Robert Lighthizer in a statement.
It also found that the United States had not adequately explained the choice of products hit by the tariffs, or why the measures were necessary based on what Washington saw as Chinese companies' misappropriation and unfair competition.
President Donald Trump justified the China tariffs by citing a 1974 law allowing the president to impose tariffs and other restrictions on imports in retaliation for unfair trade practices and other tactics that disadvantage the USA commercially, insisting the levies were necessary to counter China's allegedly rampant violation of intellectual property rights, particularly in the technology sector.
China's Ministry of Commerce hailed the decision, expressing hope that the USA would "respect the rulings of the WTO" and "take practical actions" to bring its policies into line with the ruling. An additional 25% duties were imposed in June 2018 against Chinese goods worth about $34 billion in annual trade.
The US tariffs against China were authorized under Section 301 of the Trade Act of 1974, which empowers the president to levy tariffs and other import restrictions whenever a foreign country imposes unfair trade practices that affect US commerce.
While the ruling bolsters Beijing's claims that Trump's trade war skirted WTO rules, Washington can effectively veto the decision by lodging an appeal at any point in the next 60 days.