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The World Trade Organisation (WTO) has rejected the 2018 import taxes that Donald Trump, US president at the time, imposed on foreign steel and aluminium, saying they breached global trade rules.
Mr Trump’s tariffs of 25 per cent on foreign steel and 10 per cent on aluminium angered America’s long-standing allies, including the EU and Japan, because he relied on a little-used provision of US trade law to declare their steel and aluminium a threat to US national security.
China and other trading partners challenged the tariffs at the 164-member WTO.
In a ruling issued on Friday, the WTO said it was “not persuaded" that the US faced “an emergency in international relations" that would justify the tariffs.
But the decision is unlikely to have a real-world impact. If the US appeals the ruling, it will go nowhere because the WTO’s Appellate Body has not functioned for three years after the US blocked the appointment of new judges to the panel.
The administration of US President Joe Biden has already reached agreements with the EU, Japan and the UK to essentially drop the tariffs and replace them with import quotas under which the taxes do not apply.
The trading partners dropped their retaliatory tariffs against the US in return.
But the Biden administration has still criticised Friday’s WTO decision.
“The United States strongly rejects the flawed interpretation and conclusions," said Adam Hodge, spokesman for the Office of the US Trade Representative.
“The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement."
The WTO “has no authority to second-guess" the national security decisions of its member countries, he said.
Mr Biden’s trade team has attempted to find a balance between mending fences with US allies angry over Mr Trump’s “America First” trade policies, and keeping tariffs popular with many American steel and aluminium producers and their workers.
Christine McDaniel, a trade analyst with George Mason University’s Mercatus Centre, said the ruling against the Trump administration's tariffs was not a surprise.
“Everybody knew that it was clear protectionism," she said.
“Technically speaking, countries are able to act in their own self-interest when it comes to national security."
The WTO did not buy the reasons the US gave for the tariffs, she said.