Biden Wrongly Backed Trump in Steel Feud with the World Trade Organization

In March 2018, the Trump Administration levied a 25% tariff on steel imports and a 10% tariff on aluminum imports. The tariffs launched an international trade war between the United States and the majority of its closest trade partners. Multiple nations, angered by the tariffs, responded through formal complaints against the United States through the World Trade Organization (WTO). This past month, the WTO ruled against the United States and its use of Section 232 to bypass its free trade agreements and rules. The Biden Administration criticized the ruling and filed a formal appeal through the WTO’s Appellate Body, solidifying the administration’s support for these tariffs to remain indefinitely to insulate domestic industry from competition, all while continuing the false claim that many U.S. allies are national security threats. 

Section 232 of the Trade Expansion Act allows the president to impose tariffs on imports that threaten national security following an investigation by the Commerce Department. In the case of the 2018 tariffs, the Trump Administration claimed that the United States was woefully unprepared for a hypothetical wartime environment. In rationalizing the tariffs, the Department of Commerce drew parallels to past wars compared to the United States’ present capabilities: 

“Should the U.S. once again experience a conflict on the scale of the Vietnam War, steel production capacity may be slightly insufficient to meet national security needs. But if the U.S. were to experience a conflict requiring the production increase seen during the Second World War, the existing domestic steel production capacity would be unable to meet national security requirements.” 

While the legitimacy of the tariffs is heavily doubted by the international community, the use of Section 232 created a massive freight train-sized hole in international trade law. The United States essentially created its own unquestionable exemption within the WTO and other international trade agreements.  

The tariffs, which were harshly criticized by economists and trade analysts, sent shockwaves throughout the global community, especially amongst allies with longstanding free trade agreements. Numerous countries filed complaints against the United States through the WTO, including some of its closest allies in the European Union, Canada, and Mexico. China, Switzerland, Turkey, and Norway also filed complaints. The complaints alleged that the United States use of Section 232 violated numerous articles of the central WTO Agreement, the General Agreement on Tariffs and Trade (GATT), and the Agreement on Safeguards. 

Concurrent with the formal complaints through the WTO, many nations affected by the steel and aluminum tariffs responded with retaliatory tariffs. China, the European Union, Canada, India, and Mexico ramped up protectionist tariffs as retribution against the United States, as the WTO lacked compelling enforcement mechanisms. The retaliatory tariffs took a large toll to the United States economy, with some estimates totaling a cost of approximately $73.2 billion. Some countries received exemptions to the tariffs1, while some negotiated for tariff rate quotas instead.2 

In December 2022, more than four years after tariffs were initially implemented by the Trump Administration, the WTO panel decision for cases brought against the United States was circulated. All four panels ruled against the United States, finding that the use of Section 232 to bypass WTO rules were not “taken in time of war or other emergency in international relations.” Additionally, the panels found that the exemptions “confer[ed] an advantage to products from Australia, Argentina, Brazil, the Republic of Korea, Canada, and Mexico that has not been accorded immediately, and unconditionally to like products from all other Members.” The decision was expected among the international trade community, which generally interpreted the tariffs as a protectionist measure for political convenience rather than for national security purposes.  

One month after the WTO ruled against the United States’ use of Section 232, the Biden Administration filed an appeal within the WTO’s dispute settlement body. U.S. Ambassador to the WTO, Maria Pagán, reiterated the Administration’s position in the declaration of the appeal, “The United States has been clear that it was a mistake to begin adjudicating national security at the WTO. We warned at the time this would open the door to future disputes that would further undermine the foundations of the WTO.” The appeal will likely never be heard, as the Appellate Body of the WTO dispute settlement body has been inoperative since December 2019 because the United States has blocked all nominations to fill the appellate vacancies. The decision to appeal allows geopolitical cover for the United States by leaving the cases in legal limbo, allowing the United States’ tariffs to remain unchanged.  

The Biden Administration’s choice to ignore the panel’s decision and maintain these tariffs under the guise of national security signals that it plans to continue undermining the World Trade Organization. Rather than supporting international rule of law and working with allies to repair trade agreements, President Biden is continuing to insulate domestic industries from international competition and claiming that crucial trade partners are national security threats. The continued enforcement of these tariffs demonstrates the misguided views of international trade held by many in Washington. Proponents of free trade may have to wait until the 2024 presidential election for a potential repeal of these tariffs and a greater return to the international economy.

[1] Argentina, Brazil, Australia, South Korea 

[2] Mexico and Canada (USMCA), the European Union, United Kingdom, Japan