After listening to the clip about the imposition of tariffs or trade restrictions on the United States in sales of chicken feet to China market, the potential effects of such actions become obvious. It is clear that trade restrictions can pose detrimental impacts not only to the countries involved but also to the whole world. The tariffs imposed by China reduced the United States’ chicken feet export by 80% percent which a huge amount (WTO sides with U.S. in poultry dispute with China, 2013). China felt that their move was justified because the cheap imports were outcompeting the local companies. However, this was found to be against the rules of international free trade. International trade increases the number of products and choices for consumers while improving quality and prices because of increased competition. Conversely, free trade is not acceptable to all which leads to the imposition of tariffs. Although not all trade restrictions evoke retaliation, the United States could have retaliated to a smaller country or even impose tariffs on China goods in the United States market.
The case I chose is DS 543 that involved the imposition of tariffs by the United States on certain goods imported from China. This emerged as one of the trade wars which resulted in retaliation by trade restrictions from both nations. The Trump administration levied tariffs on over $200 billion Chinese goods on the account of intellectual property and technology transfer responses (Scheipl et al., 2020). The United States’ actions were not well substantiated with evidence that tariffs were the best idea to curb the actions of China on technology transfer and intellectual property. This required scrutiny because it was not clear why the United States never considered other options such as dialogue instead of using tariffs. Previously, the European Union had delayed authorization of export of chicken treatment with certain chemicals without adequate reasoning despite the evidence the chemical did not pose a threat to human life. While these actions seem justified by Trump’s administration to revenge against countries that went against their wishes, it turned out to be messy.
The actions by United States towards China goods evoked retaliation. China retaliated by imposing a 25% tariff on United Stated goods worth $16 billion which included crude oil and vehicles (Scheipl et al., 2020). In return, the United States retaliated by announcing tariffs on Chinese goods worth $16 billion (Scheipl et al., 2020). These actions raise prices for the products which is transferred to the consumers who may opt to look for alternatives leading to low sales. While tariffs may be imposed to protect domestic industries, free trade assumes the restrictions should not be directed to one partner while others are allowed to enjoy privileges over others. In this instance, retaliation can disadvantage both countries because the trade gains will be reduced resulting in fewer importations and less trade between the two countries.
In the DS543 dispute, the World Trade Organization rules against the United States by stating that the later had broken the rules of trade agreement or global trade. However, the actions that followed as a retaliation caused damage to citizens of both states as opposed to the initially intended action of curbing the claims of unfair trade practices by China. In other situations, tariffs can cause a country to retaliate by looking for an alternative market for its products which may worsen trade between any two nations. While not all trade restrictions attract retaliation, countries are like to look for options to recover from the trade restrictions which may eventually pose a negative impact on trade gains.
References
Scheipl, T., Bobek, V., & Horvat, T. (2020). Trade war between the USA and China: Impact on an Austrian company in the steel sector. Naše gospodarstvo/Our economy, 66(1), 39-51. Web.
World trade organization. 2021. WTO | dispute settlement – DS543: United States tariff measures on certain goods from China. Web.
WTO sides with U.S. In poultry dispute with China (2013). Npr. Web.