Trade Group Paves the Way for China Sanctions on the U.S.

WASHINGTON—The Trump administration blasted a World Trade Organization decision Tuesday that could let China levy sanctions on the United States.

The 2-1 decision by the WTO’s appellate body was actually a mixed verdict in a case that dates back to 2007 and is unrelated to the tariffs the administration has slapped on $250 billion in Chinese goods. In its final decision, the WTO agreed with the U.S. that China lets state-owned enterprises (SOEs) subsidize Chinese firms by providing components at unfairly low costs.

But it said the U.S. wrongly calculated the tariffs imposed to punish China for the subsidies. If the U.S. doesn’t recalculate them, China can retaliate with its own sanctions.

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The Office of the U.S. Trade Representative said the ruling “undermines WTO rules, making them less effective to counteract Chinese SOE subsidies that are harming U.S. workers and businesses and distorting markets worldwide.”

Separately, the U.S.-China are locked in a yearlong standoff over U.S. allegations that China uses predatory tactics — including outright theft of trade secrets — in an aggressive push to challenge American technological dominance.