Trump’s tariffs: WTO consultations requested by China, Canada and the European Union

Introduction

In this briefing, we analyse how China, Canada, and the EU have responded to the tariffs which President Donald Trump has imposed by commencing dispute settlement proceedings before the World Trade Organization (WTO). These actions—which will continue despite the 90-day pause on the reciprocal tariffs—may end up being symbolic, as the US’s commitment to WTO rules and the WTO as an institution is not what it once was. The US has even stopped paying into the WTO budget. But these legal actions signal that for other WTO members, the WTO remains an important part of the international architecture for free trade. We examine the EU’s response to President Trump’s tariffs in a separate briefing. 

China-specific tariffs

The first WTO complaint against the new set of US tariffs was brought by China in response to President Trump’s Executive Order (effective 4 February), imposing a 10% tariff on all Chinese goods. This 10% tariff is additional to any other tariffs that the US already imposes on goods from China, as well as any fees and applicable charges on the same goods. The US’s rationale for the imposition was to address the sustained flow of synthetic opioids (fentanyl) into the country, which was described as a national emergency.^[1] 

In addition to imposing retaliatory tariffs,^[2] on 4 February China requested WTO consultations with the US. Consultations take 60 days, and if they fail—as might be expected—the next step will be for China to request a WTO panel. 

In its request, China argues that the US’s tariffs violate GATT rules.^[3] Specifically, China alleges that: 

• the tariffs violate the most favoured nation obligation set out in Article I:1 of GATT; and
• the tariffs are in excess of the US’s negotiated and bound rates contrary to Article II:1(a) and (b) of GATT. 

On 14 February, the US responded to China’s request for consultations, both citing Article XXI of GATT (the security exception) and reiterating the US’s longstanding position that security measures are “political matters not susceptible of review or capable of resolution by WTO dispute settlement”. The US also referred to China’s retaliatory tariffs, calling China “hypocritical” for invoking dispute settlement for an alleged breach of WTO rules while “apparently choos[ing] to breach WTO rules by unilaterally determining that a breach has occurred” by imposing retaliatory tariffs.^[4] 

There is an interesting history to this remark. Article 23 of the WTO Dispute Settlement Understanding prohibits WTO Members from unilaterally determining that a WTO breach has occurred without going through the WTO dispute settlement system. This provision was originally designed to prevent the US from making such determinations under Section 301 of the US Trade Act, which had become (and has now again become) standard US practice. 

A month later, on 4 March President Trump increased the tariffs on Chinese goods from 10% to 20%, again claiming that China had not taken adequate steps to alleviate the illicit drug crisis.^[5] China then lodged a second request for consultations, citing the same legal basis as the prior request.^[6] The US responded on 18 March, again citing a national security rationale.^[7]

Canada-specific tariffs

On 1 February, President Trump issued an Executive Order imposing a 10% tariff on Canadian energy products and a 25% tariff on all other Canadian products.^[8] These tariffs were set to take effect on 4 February, but after reaching an agreement with Canada on border enforcement, President Trump announced that the tariffs would be suspended for 30 days. As part of the agreement, Canada committed to implementing a $1.3 billion border security plan and launching a Canada-US Joint Strike Force on organised crime, among other measures. 

On 4 March, the suspension ended and the tariffs came into force. On the same day, Canada imposed an additional 25% tariff on $30 billion worth of US goods. Canada also lodged a request for consultations with the US before the WTO.^[9] Canada raised the same Article I:1 and II:1(a) and (b) GATT legal arguments as China but also alleged that President Trump’s measures fail to “provide, to the extent possible, for a de minimis shipment value or dutiable amount for which customs duties and taxes will not be collected”, contrary to Article 7.8.2(d) of the WTO’s Trade Facilitation Agreement.^[10] Canada additionally claims that the measures breach Article V:3 GATT as the measures “at issue apply a customs duty to goods in transit.” 

Canada also claims that its request is a matter of urgency on the basis that the tariffs apply to agricultural “perishable goods.” In such cases, a WTO panel is required to issue its report within three months, instead of the usual six months. 

On 6 March, the US exempted products that satisfy the ‘rules of origin’ requirements under the United States-Mexico-Canada Agreement (USMCA).^[11] This reprieve, covering a significant proportion of Canadian imports, was in particular prompted by concerns raised by US car manufacturers whose supply chains stretch across North America. This did not, however, affect Canada’s retaliatory measures, nor its WTO action.

On 14 March, the US responded to Canada’s request for consultations on the same basis as its response to China: reiterating its position that the measures taken relate to issues of national security, and as such are political matters that are not susceptible to review or capable of WTO resolution.^[12] The US also criticised Canada for being “specious” by imposing countermeasures while invoking the WTO dispute settlement mechanism. 

Steel and aluminium tariffs

In addition to the country-specific tariffs discussed above, on 12 March the US imposed a 25% tariff on aluminium and steel products from all sources.^[13] Despite the fact that many countries are affected by this measure, those taking the matter to the WTO are limited. Canada took the lead, lodging another request for consultations, repeating the same arguments in its other request.^[14] As Canada’s request for consultations was initiated under Article XXII:1 GATT (instead of Article XXIII:1 GATT), it is possible for other WTO members to request to participate in the consultations if they consider that they have a “substantial trade interest” in the dispute, although the respondent must agree that the member’s claim is well-founded. On 20 March, the EU submitted a request to join Canada’s consultations,^[15] citing its “substantial trade interest” in the dispute given that the US steel and aluminium tariffs also affect a total of €26 billion of EU exports.^[16] 

In its response, the US reiterated the claim that the measures taken relate to issues of national security which are not susceptible to WTO review or resolution.^[17] As of 9 April, the US has yet to respond to the EU’s consultation request. 

Shortly after President Trump announced the tariffs on steel and aluminium, President da Silva of Brazil said that the country would “react commercially, either by filing a complaint at the WTO or taxing products we import from them.” Brazil has yet to request consultations with the US.

Automobile tariffs

A 25% tariff on imports of automobiles came into effect on 2 April (and will come into effect on certain automobile parts no later than 3 May).^[18] These tariffs are additional to the current tariffs that the US already charges on imports of automobiles and automobile parts. For instance, the US’ most-favoured nation tariff on automobiles is 2.5%. This means that the new base rate tariff on automobiles imported into the US is 27.5% (except for Canada and Mexico – see below). The tariffs that Trump separately announced on China, Canada and Mexico in February and March are payable in addition to this tariff. Furthermore, the Section 301 tariffs that were announced under the Biden administration on electric vehicles and lithium-ion vehicle batteries from China will also need to be added on top of this additional 25% tariff.^[19]

These tariffs are origin-neutral, and the basis for these tariffs is that protecting the US automobile industry is vital to national security. 

The treatment of automobiles qualifying under USMCA is interesting. In a deviation from the 6 March rule exempting USMCA compliant products from the 25% Canada-specific tariffs, the special 25% automobile tariffs continue to apply to USMCA-compliant automobiles. However, there is an exception for the value of any US content in the automobiles. USMCA-compliant parts remain tariff-free for now, but the same tariff and content-exclusion regime will apply as soon as an appropriate customs process is put in place. 

In response, on 3 April Canada requested WTO consultations with the US, raising the same Article I:1 and II:1(a) and (b) GATT legal arguments included in its previous requests.^[20] In addition, Canada alleges that the tariffs are inconsistent with Article VIII:3 GATT as the measures “impose substantial penalties for minor breaches of customs regulations or procedural requirements.” This appears to be in respect of the rule that the 25% tariff will apply to the full value of an imported automobile if US Customs determines that its US content was overstated, regardless of the actual US content of the automobile. The tariff applies retrospectively (from the date of the overstatement) and prospectively (until the overstatement has been corrected) to the full value of all automobiles of the same model imported by the same importer. 

‘Liberation Day’

On 2 April, President Trump announced a global baseline 10% tariff on all imports into the US (effective from 5 April) and a range of additional ‘reciprocal’ tariffs on numerous countries and the EU (effective from 9 April).^[21] These reciprocal tariffs – which will be payable in addition to tariffs that the US currently levies – range from 10% (the minimum baseline) to 73%. According to the administration, these tariffs are calculated by reference to the size of that country’s trade deficit with the US. There is an exemption for US content of products, provided this makes up at least 20% of their total value.

All countries will face steeper tariff rates, including China which was hit with a 34% tariff (but the total tariff rate on China has since risen to 125%), while the EU will face an additional 20% tariff on top of the tariffs the US already imposes on the EU. However, these reciprocal tariffs have been paused for 90-days for all countries, other than China. The 10% baseline tariff will continue to apply to most countries during the 90-day period. No additional tariffs were announced on Mexico and Canada. The export of their goods, save for the non-US content of automobiles and parts, will remain tariff-free provided the products are USMCA-compliant. 

These ‘reciprocal’ tariffs apply to all products, but exclusions exist for certain medical items (including pharmaceuticals), as well as agricultural and technology items (including semiconductor chips) and certain raw materials.^[22] President Trump has indicated that the US will soon impose tariffs on semiconductor chips and pharmaceuticals. The ‘reciprocal’ tariffs also do not apply to automobiles and automobile parts (as specified in Proclamation 10908), as well as steel and aluminium products (as specified in Proclamations 10895 and 10896), which remain subject to the specific tariff rates for these products.

On 4 April, China requested WTO consultations with the US in respect of the tariffs President Trump announced on ‘Liberation Day’.^[23] In addition to raising the same Article I:1 and II:1(a) and (b) GATT legal arguments included in its previous requests, China also claimed that the tariffs breach Article X:3(a) claiming that the US “does not administer the measures at issue in a uniform, impartial, and reasonable manner.” China has also alleged that by excluding the US content of the imported goods, the tariffs fail to use the transaction value as the basis for the customs value and applies unjustified adjustment or valuation methods for customs purposes, contrary to Articles 1.1 and 8 of the Customs Valuation Agreement and other instruments.^[24] China also alleges that, by excluding the value of the US content and the foregone government revenue, this provides subsidies, contingent in law or in fact upon export performance and the use of domestic over imported goods, contrary to Articles 3.1 and 3.2 of the SCM Agreement. China also announced that it would be imposing additional tariffs of 34% on US imports. In response, the Trump administration will impose an additional 50% tariff on China effective from 9 April. China has responded by increasing tariffs on US goods to 84% and filing another consultation request with the US at the WTO. China’s Ministry of Commerce has described the Trump administration’s latest tariff increase as a “mistake on top of a mistake” and has vowed to resolutely uphold the international economic and trade order. In response, President Trump announced that the tariff on China would be immediately increased to 125%. In addition, as noted above, the ‘reciprocal’ tariff rates announced on 2 April will be paused for 90-days for all countries other than China. The 10% baseline tariff will continue to apply to most countries during the 90-day period. 

Certain countries, including Brazil, Japan, and Australia are considering initiating dispute actions against the US tariffs. However, none have officially announced any plans to file complaints with the WTO or under free trade agreements yet.

Responses from other countries to these tariffs, including at the WTO, remain uncertain. 

The future

As noted, after 60 days of WTO consultations, complainant countries can request a WTO panel.^[25] These dates fall on:

• 6 April – for China in respect of the 20% tariff on Chinese goods
• 3 May – for Canada in respect of the 25% tariffs on Canadian goods (and 10% on Canadian energy goods and potash)
• 12 May – for Canada^[26] in respect of the 25% tariffs on steel and aluminium products
• 3 June – for Canada in respect of the 25% tariffs on automobiles and automobile parts
• 4 June – for China in respect of the ‘reciprocal’ tariffs on Chinese goods

It is to be expected that the US will avoid a negative WTO panel ruling being formally adopted, which it can do by ‘appealing into the void’. This is now possible because there are currently no Appellate Body members, due to the US having blocked all appointments since 2019. However, some WTO Members, including the EU, have adopted legislation permitting them to retaliate against unsuccessful respondent WTO members in such circumstances. It would further be expected that the EU, at least, would retaliate against the US should it be successful in any WTO proceedings. This is not however necessarily the case for other WTO members, including China and Canada. 

^[1] Executive Order 14195 - Imposing Duties to Address the Synthetic Opioid Supply Chain in the People's Republic of China (1 February 2025); US Customs and Border Protection Notice - Implementation of Additional Duties on Products of the People's Republic of China Pursuant to the President's February 1, 2025 Executive Order Imposing Duties To Address the Synthetic Opioid Supply Chain in the People's Republic of China (5 February 2025).

^[2] Notification No. 1/2025 of China's State Council Tariff Commission (4 February 2025)

^[3] WTO, United States – Additional Tariff Measures on Goods from China – Request for consultations by China, WT/DS633/1 (4 February 2025).

^[4] WTO, United States - Additional Tariff Measures on Goods from China – Communication from the United States, WT/DS633/2 (14 February 2025).

^[5] Executive Order 14228 - Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People's Republic of China (3 March 2025); US Customs and Border Protection Notice - Further Amended Notice of Implementation of Additional Duties on Products of the People's Republic of China Pursuant to the President's Executive Order 14195, Imposing Duties To Address the Synthetic Opioid Supply Chain in the People's Republic of China (6 March 2025).

^[6] WTO, United States – Additional Tariff Measures on Goods from China – Request for consultations by China, WT/DS633/1/Add.1 (4 March 2025).

^[7] WTO, United States – Additional Tariff Measures on Goods from China – Communication from the United States, WT/DS633/3 (14 March 2025).

^[8] Executive Order 14193 - Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border (1 February 2025); US Customs and Border Protection Notice - Notice of Implementation of Additional Duties on Products of Canada Pursuant to the President's Executive Order 14193, Imposing Duties To Address the Flow of Illicit Drugs Across Our Northern Border (6 March 2025). 

^[9] WTO, United States – Additional Import Duties on Goods from Canada – Request for consultations by Canada, WT/DS634/1 (4 March 2025).

^[10] On 5 February, President Trump issued an Executive Order 14200 – Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People's Republic of China (5 February 2025); US Customs and Border Protection Notice - Amended Notice of Implementation of Additional Duties on Products of the People's Republic of China Pursuant to the President's February 1, 2025 Executive Order Imposing Duties To Address the Synthetic Opioid Supply Chain in the People's Republic of China (12 February 2025). This amended the tariffs on imports from China to allow duty-free de minimis treatment until adequate systems were in place to collect the tariff. On 2 April, President Trump announced that duty-free de minimis treatment for items worth $800 or less entered via the internal postal system from China or Hong Kong would be suspended. The tariff that applies to such items, effective from 2 May, is either 30% of the postal item or $25 per postal item (rising to $50 on 1 June). See Executive Order 14256 - Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports (2 April 2025).

^[11] Executive Order 14231 – Amendment to duties to address the flow of illicit drugs across our Northern border (6 March 2025); US Customs and Border Protection Notice - Amendment to Notice of Implementation of Additional Duties on Products of Canada Pursuant to the President's Executive Order 14193, Imposing Duties To Address the Flow of Illicit Drugs Across our Northern Border (11 March 2025).

^[12] WTO, United States – Additional Import Duties on Goods from Canada – Communication from the United States, WT/DS634/2 (14 March 2025).

^[13] Proclamation 10896 - Adjusting Imports of Steel into The United States (10 February 2025); Proclamation 10895 - Adjusting Imports of Aluminum into the United States (11 February 2025).

^[14] WTO, United States – Additional Import Duties on Steel and Aluminium Articles from Canada – Request for consultations by Canada, WT/DS635/1 (12 March 2025).

^[15] WTO, United States – Additional Import Duties on Steel and Aluminium Articles from Canada – Request to join consultations, WT/DS635/2 (20 March 2025).

^[16] In response to President Trump’s tariffs, the EU has allowed the suspension of existing 2018 and 2020 countermeasures targeting a range of US products to lapse on 1 April.

^[17] WTO, United States – Additional Import Duties on Steel and Aluminium Articles from Canada – Response from the United States, WT/DS635/3 (21 March 2025).

^[18] Proclamation 10908 - Adjusting Imports of Automobiles and Automobile Parts Into the United States (26 March 2025).

^[19] Office of the United States Trade Representative, Notice of Modification: China's Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation (18 September 2024). Tariffs on other products from China enter into force on 27 September 2024.

^[20]  WTO, United States - Additional duties on imports of automobiles and automobile parts from Canada - Request for consultations by Canada, WT/DS637/1 (4 April 2025). 

^[21] Executive Order 14257 - Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits (2 April 2025).

^[22] For the list of excluded goods see, Annex II of Executive Order 14257 (2 April 2025).

^[23] WTO, United States - Universal and country-specific additional duties on imports from China – Request for consultations by China, WT/DS638/1 (4 April 2025). 

^[24] The legal instruments cited by China are Articles 1.1 and 8 of the Customs Valuation Agreement, and the relevant interpretative Notes in Annex I thereto, as well as paragraphs 1 and 2 of the General Introductory Commentary of the Customs Valuation Agreement, and Articles VII:1, VII:2(a), (b) and (c) of the GATT 1994.

^[25] A request to establish a WTO panel will appear on the agenda of the next upcoming Dispute Settlement Body (DSB) meeting. As such, the requests go directly to the WTO, not the respondent members. It is likely that any requests will be made, rejected at the first DSB meeting and then made again at a second DSB meeting. This is because, under Article 6 of the DSU rules, the panel will be established at the second meeting unless there is consensus against it. 

^[26]  It is unclear whether the EU will also have the right to request the establishment of a panel at the end of the 60-day period. The EU may need to wait until Canada makes this request first. If Canada does, the EU will have the opportunity to be heard and to make submissions before the panel.