China challenges Trump tariffs at World Trade Organization!
China filed a World Trade Organization complaint on Wednesday against US President Donald Trump's new 10% tariff on Chinese imports and his cancellation of a duty-free exemption for low-value packages, arguing that the actions are "protectionist" and violate WTO rules.
Beijing's request for U.S. trade consultations came as confusion reigned among carriers and retailers over Trump's closing of the "de minimis" exemption for imports of packages valued under $800 and widely used by e-commerce firms including Shein, Temu and Amazon.
A Customs and Border Protection official said all small packages from China and Hong Kong were required to have customs records on file prior to arrival, and there was a possibility that some shipments would be returned without this documentation.
The WTO said China had filed a request for consultations with the US on the tariffs. China argues in the document that Trump's new duties aimed at stopping the flow of the opioid fentanyl and its precursor chemicals into the US "are based on baseless and false allegations about China."
He said the duties are discriminatory, apply only to goods of Chinese origin, and are inconsistent with the US's WTO obligations.
The request for consultations is the start of a dispute process that could lead to a ruling that Trump's duties violated trade rules in the same way that a 2020 WTO ruling found that his first-term tariffs on China broke trade rules.
But such a victory is unlikely to bring relief to Beijing, because the WTO's Appellate Body has been largely dysfunctional for years, as the US has blocked the appointment of appellate judges over what it sees as judicial abuses by the body. That has prevented a final ruling in the 2020 case.
No Trump-Xi talks
On Wednesday, there was no phone call scheduled between Trump and Chinese President Xi Jinping to discuss the new U.S. tariffs and Beijing's retaliatory measures, a person familiar with the matter told Reuters. Trump said on Tuesday he was in no rush to speak to Xi since the tariffs did not take effect until after midnight Eastern time.
China responded with targeted tariffs on imports of American coal, liquefied natural gas, crude oil and agricultural equipment and opened an antitrust investigation into Alphabet's Google. The start of the new trade war has engulfed the retail and shipping sectors.
Currently, de minimis parcels are consolidated so that customs can clear hundreds or thousands of shipments at once, but now they will require individual clearances, significantly increasing the burden on postal services, intermediaries and customs agents, Cori said.
The provision was originally intended as a way to streamline trade, and its use has grown with the rise of online shopping. About 1.36 billion shipments entered the United States using the de minimis provision in 2024, up 36% from 2023, according to U.S. Customs and Border Protection (CBP) data.
Tariff uncertainty
US Treasury Secretary Scott Bessent defended Trump's tariff strategy on Wednesday in his first media interview since taking office, saying it was aimed at bringing manufacturing back to the US, including industries that have largely moved away from US shores.
U.S. Federal Reserve officials on Wednesday pointed to the great policy uncertainty around tariffs and other issues that arose from the Trump administration in its early days as among the key challenges in understanding where to take U.S. monetary policy in the months ahead.
Chicago Fed President Austan Goolsbee warned that ignoring the potential inflationary impact of tariffs would be a mistake, while Richmond Fed President Thomas Barkin said it remains impossible at this early stage to know where costs might increase from any tariffs.
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