China contests Trump's tariffs at the World Trade Organization; shipping companies forewarn of potential turmoil
In the ongoing trade war between the United States and China, new developments have emerged that continue to shape the global economic landscape.
Chicago Fed President Austan Goolsbee has warned of the potential inflationary impact of tariffs, as the WTO's Appellate Body remains largely inoperable due to US blocking the appointment of appellate judges. This has led to a complex legal landscape, with the US Court of International Trade ruling that the 10% tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were illegal, but the ruling has been stayed pending appeals, and the government continues to collect tariffs during the litigation.
The initial 10% tariff on all Chinese imports was implemented in early 2025, along with the cancellation of the duty-free exemption (the "de minimis" threshold) for low-value packages, which affected e-commerce and small shipments. In response, China filed a WTO complaint and imposed its own tariffs and regulatory retaliations, including rare-earth export controls and blacklists.
The launch of the new trade war has caught the retail and shipping sectors flat-footed, with Martin Palmer, co-founder of Hurricane Commerce, stating there is confusion and uncertainty about the situation, and things may return to normal in two weeks. The US Postal Service (USPS) has worked to implement an efficient collection mechanism for the new China tariffs to minimize disruptions to deliveries, but the de minimis parcels require individual clearances instead of consolidated clearance, significantly increasing the burden for postal services, brokers, and customs agents.
US Treasury Secretary Steven Mnuchin defended Trump's tariff strategy in his first media interview, stating it aims to bring manufacturing back to the US. However, the impact of tariffs on cost increases remains uncertain, with Richmond Fed President Thomas Barkin stating it is currently impossible to know where these increases might be absorbed or passed along to consumers.
The tariff truce between the US and China, which partially rolled back the highest April 2025 tariffs to 10%, has temporarily eased trade tensions but does not end the WTO case or the broader trade conflict as of July 2025. China responded to the new US tariffs by imposing targeted tariffs on US coal, liquefied natural gas, crude oil, and farm equipment, and opening an anti-monopoly investigation into Alphabet's Google.
As of Wednesday, no call between Trump and Chinese President Xi Jinping had been scheduled to discuss the new US tariffs and Beijing's retaliatory measures. China argues that Trump's new duties aimed at halting the flow of fentanyl opioids and their precursor chemicals to the US are discriminatory and inconsistent with the US's WTO obligations. The WTO complaint filed by China against Donald Trump's new 10% tariff on Chinese imports and the cancellation of the duty-free exemption for low-value packages remains active but has not resolved the dispute.
In conclusion, the ongoing trade tensions between the US and China continue to impact global economies, with the WTO complaint remaining active but unresolved, and the tariffs currently maintained under a truce with reduced rates while US courts adjudicate the legality of the tariffs. The impact of tariffs on cost increases and their absorption or passing along to consumers remains uncertain, and the broader trade conflict continues to shape the global economic landscape.
- The ongoing trade war between the United States and China is shaping the global economic landscape, especially in the manufacturing industry, as tariffs imposed by both countries are being collected during litigation.
- The potential inflationary impact of tariffs is a concern for some policy-and-legislation makers, such as Chicago Fed President Austan Goolsbee, who warn of the uncertainties associated with these costs.
- The complex legal landscape has resulted from the US blocking the appointment of appellate judges at the WTO's Appellate Body, leading to a stay on some rulings, including the one that deemed the 10% tariffs imposed under the International Emergency Economic Powers Act (IEEPA) illegal.
- The ongoing trade conflict is not limited to finance and economics but has expanded into politics, general-news, and crime-and-justice, with China filing a WTO complaint against US tariffs and opening an anti-monopoly investigation into Alphabet's Google.
