- The World Trade Organization (WTO) allowed China to collect $3.6 billion in tariffs against the United States.
- The trade war has become so big that the retaliatory tariffs won’t add any layer of tension.
- The stock market is very likely to consider this development as noise.
On Friday, the World Trade Organization (WTO) granted China permission to impose $3.6 billion in punitive tariffs against the United States. The Geneva-based organization ruled that the U.S. illegally inflated duties on machinery, metals, electronics, minerals and other products. The three-member arbitration panel of the WTO said that China has the go-ahead to start imposing retaliatory tariffs as early as this month.
At the core of the case is the technique used by the United States to determine dumping penalties. According to Fortune, the U.S. employs “zeroing methodology.” The practice enables U.S. authorities to select violators at will while failing to recognize law-abiding exporters. As a result, the U.S. can magnify the penalties charged.
The WTO ruling came at a time when both countries are struggling to close any substantial trade deal. Media outlets such as Bloomberg suggest that the multi-billion dollar sanction can add tension to the trade talks. However, the trade war has turned into a mountain of tariffs to the tune of hundreds of billions of dollars – making the WTO sanctions seem negligible.
The WTO Sanctions Can Be a Deal Sweetener At Best
The back and forth between the U.S. and China over the last few years has resulted in a humongous wall of tariffs worth $735 billion. The U.S. has hit China with tariffs on $550 billion worth of products. In response, China slapped duties on $185 billion in U.S. goods.
The stakes involved…