China has lodged a complaint against the United States at the World Trade Organization (WTO) over U.S. import duties on Monday.
The United States began imposing 15% tariffs on $125bn worth of Chinese goods on Sunday, September 1st: the import duties target popular products ranging from cellphones and laptops to toys and clothes. China swiftly moved to retaliate with a 5% tariff on US crude oil; overall, China will introduce tariffs on $75bn worth of US goods.
Washington claims to be penalizing China for theft of intellectual property, which is not covered by WTO rules. In this sense, the US claims that tariffs rebalance the asymmetry in Sino-American relations.
Monday was a banking holiday in the US and new developments started affecting the US stock market on Tuesday. Consumer spending is a major part of the US economy. In 2017 the US retail sector was worth $1.14 trillion or just under 6% of the US GDP.
Tariffs have an immediate effect on sales, as prices affect retail price.
The first to feel the pinch this week are “back to school” shoppers, out to buy anything from affordable “Made in China” musical instruments to contact lenses.
Mounting business and farm group opposition threaten President Trump in key constituencies for the 2020 elections. No date has been announced for U.S.-Chinese negotiations.
This is the third case Beijing brings against the US at the WTO. Under WTO rules Washington has 60 days to try to settle the latest dispute. Then China could ask the WTO to adjudicate, that is, a process that would take several years. Should China win the case, it could gain WTO approval to introduce trade sanctions.