Since President Trump imposed tariffs last month of up to 50 percent on washers and solar products, five of America’s trading partners have filed requests for consultation with the World Trade Organization.
South Korea, the first country to cry foul, filed consultation requests for the washer and solar tariffs on Jan. 24. Taiwan then submitted a request regarding solar tariffs on Jan 29, and last week, the World Trade Organization received filings from China on both sets of tariffs, and the European Union and Singapore on the solar tariffs.
These requests are just the beginning of a long process to determine if the U.S. violated a World Trade Organization agreement by imposing tariffs under Section 201 of the 1974 Trade Act.
Here are the next steps at the World Trade Organization for each of the five disputes:
- Consultation: This serves as a venue for the countries to settle a trade dispute. If a settlement is reached, the process stops at this stage. Consultation can last up to 60 days.
- Dispute Panel Formation: Should the countries fail to reach a resolution, a dispute panel can be created to examine the issue. Establishing the panel can take up to 45 days.
- Panel Process: The panel holds hearings allowing each country to defend its argument. Following this, the panel issues a report to the countries involved. The panel process can last up to six months.
- Report Adopted: The panel submits its final report to World Trade Organization members, which can take up to three weeks. The report is then adopted by the Dispute Settlement Body if no appeal is made. This can take up to 60 days.
- Appeal Process: Either country involved can appeal the decision of the panel. The appeal is heard by members of the World Trade Organization Appellate Body, a process that lasts between 60 and 90 days. The Dispute Settlement Body then has 30 days to adopt or reject the appeals report.
The process for dispute resolution can take as long as a year and three months if an appeal is made. If the country imposing tariffs is found to have violated the terms of a World Trade Organization agreement, the country is expected to change its policy to comply. If that does not occur in a reasonable amount of time, the countries that filed a dispute are authorized to retaliate.
Such retaliation can take a variety of forms, including measures to restrict U.S. exports of completely unrelated products. A U.S. decision to try to bolster American producers in one sector can have the unintended consequence of harming American producers elsewhere in the economy.
For example, in the context of an increasingly volatile U.S./China trade relationship of which the current dispute is just one symptom, China has announced it is considering restricting two major U.S. agriculture exports, sorghum and soybeans. Such tit-for-tat restrictions have the potential to do serious damage to both economies.
New tariffs or restrictions, whether imposed by other countries or the U.S., are in the interest of neither American businesses nor consumers. The U.S. may soon learn this to its regret as the cases on solar panels and washing machines proceed through the World Trade Organization.
This piece originally appeared in The Daily Signal