WTO’s ruling on Trump’s trade tariffs underscores need for fresh approach, say trade experts

While it has been a while since the biggest supply chain and logistics concern for many supply chain stakeholders was not the ongoing COVID-19 pandemic, but, instead, the United States-China trade war, the trade war got some renewed attention last week.

That was made clear in a Politico report, which indicated that the World Trade Organization (WTO) issued a ruling stating that “President Donald Trump violated global trade rules when he unilaterally imposed tariffs on what became more than $350 billion worth of Chinese goods.”

Even though the WTO made its case, the report observed that it is unlikely that the ruling will have much of an effect, due, in part, to counter-tariffs already imposed by China and a deal reached between the two super powers.

So, even though this development is unlikely to have a material impact on the current state of global trade, specifically as it relates to tariffs and the ongoing U.S.-China trade war, it was very interesting to hear thoughts about it from two of the foremost U.S.-based trade experts on a call hosted last week by the Port of Los Angeles (POLA), POLA Executive Director Gene Seroka and National Retail Federation Vice President of Supply Chain and Customs Policy Jonathan Gold.

Seroka explained that this ruling speaks to the need to fix certain aspects of trade and tariffs, and made the case for rules-based trade.

“We support the improvement economically community-wise of every American company that wants to get on the global stage and trade,” he said. “We want to support growth for our workforce, both in job skill and pay. But, at the same time, my belief is that the two largest countries in the world [need to] work together under a rules-based system. And I think if we go into these discussions like that we will see improvement…at POLA, some 55% of our business is trade to and from China. It is very important to us, and it is equally important to the one in nine people that have jobs in Southern California related to this port complex and the nearly 3 million nationwide based on cargo flows here.”

The cargo that traverses POLA reaches all of the nation’s 435 Congressional districts, making trade a conversation of global significance, when it comes to U.S., said Seroka, which comes with the hope, he added, that from this point on, the U.S. and China can find a way to get a trade deal accomplished. 

The NRF’s Gold pulled no punches, explaining that, from the outset, NRF has always been opposed to the use of tariffs, adding that his organization was in agreement with original August 2017 United States Trade Representative investigation into China’s abuse of IP theft and forced technology transfer.

“We certainly agree that China has been a bad actor, but we don’t think tariffs were the right way to go to try and get China to make changes,” said Gold. “To date, the U.S. has collected more than $58 billion in taxes from U.S. companies. Those are what the tariffs are. They are taxes that have been paid by U.S. companies that have been hurt as a result of this. It is not just the U.S. importers that have been hurt, but U.S. exporters, too, because retaliatory tariffs have been placed on U.S. exports, both in agriculture and manufacturing. We have certainly had concerns with these tariffs from the outset, and we are glad to see the WTO ruling. But we think there are better ways to go about addressing the issues with China, where it is not just a ‘go it alone’ approach. We think other countries, including the EU, Japan, and Australia and all of our allies all share the same concerns. We need to work as part of a coordinated effort to get China to change on these issues. We cannot go it alone and shoot ourselves in the foot, when it comes to these tariffs, which are taxes on U.S. companies.”

While the WTO ruling is viewed as unlikely to move the needle in one direction or the other, the comments offered up by Gold and Seroka provide some things to ponder, or food for thought, going forward. These still remain confusing and unsettling times, with many supply chain stakeholders clearly viewing trade and tariffs as confusing and unsettling, too, to be sure. In an election year, chances of any rapid development on the trade front is unlikely, no question. But, like COVID-19, it remains an issue that is not disappearing any time soon and will continue to require a fair amount of attention.