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Economics, Law and Policy 
ISSN 2576-2060 (Print) ISSN 2576-2052 (Online) 

Vol. 2, No. 2, 2019 
www.scholink.org/ojs/index.php/elp 

224 
 

Original Paper 

“Trump Tariffs”: To Establish an American-Style 

Multilateralism Model? 

Yikai WU1* 
1 International Economic Law, City University of Hongkong, Hongkong, China 
* Yikai WU, International Economic Law, City University of Hongkong, Hongkong, China 

 

Received: October 20, 2019    Accepted: October 30, 2019    Online Published: November 5, 2019 

doi:10.22158/elp.v2n2p224              URL: http://dx.doi.org/10.22158/elp.v2n2p224 

 

Abstract 

One of the goals of the world trade organization is to ensure free and fair trade around the world. 

Bound tariff rate and most-favored-nation treatment are two basic principles in WTO law, which 

should be applied and observed among WTO members. The implementation of “trump tariffs” has 

resulted in a “trade war between China and other countries”, which undoubtedly constitutes a 

violation of WTO principles, including violation of bound tariff rates and most-favored-nation 

treatment. At present, the United States is still one of the major setters of the world’s rules, and its 

every measure has an impact on the whole world. In addition to opposition from around the world, the 

trump administration’s move to impose tariffs has been criticized by most local economists and lawyers. 

To achieve fair and free trade, the trump administration should end the implementation of trump tariffs 

and fulfill its obligations in global multilateral trade and the WTO. 

Keywords 

Trump tariffs, bound tariff rates, most-favored-nation treatment 

 

1. Introduction 

In January 2018, Donald Trump imposed tariffs on solar panels of 30 percent and washing machines of 

50 percent. Then later, he imposed tariffs on steel of 25 percent and aluminum of 10 percent from most 

countries all around the world. And also on July 6, the Trump administration imposed a tariff of 25% 

on 800 types of commodities imported from China which is worth 50 billion dollars. All these 

measures Donald Trump has taken during his presidency regarding tariffs are called “Trump Tariffs”. 

In this article, we will mainly focus on the tariffs on steel and aluminum and find whether these tariffs 

constitute a violation of WTO rules. 

 



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In response to the tariff measures on steel and aluminum, many countries implemented retaliatory 

tariffs on American commodities. Canada imposed its retaliatory tariffs on July 1, 2018 firstly. 

Immediately after, China implemented tariffs equal to the 34 billion dollars tariff imposed by America 

on American goods. European Union imposed tariffs on 180 categories of goods, over 3 billion dollars 

of American commodities for retaliation. And also, Mexico implemented retaliatory tariffs which 

entered into effect on June 5 on 3 billion dollars of American commodities. Although the 25% steel 

tariff is applied to countries all around the world, there are still four countries which have negotiated a 

permanent exemption from the steel tariff with the Trump administration successfully. They are South 

Korea, Argentina, Australia and Brazil. There is no doubt that “Trump Tariffs” has a profound and 

comprehensive influence on international trade, also on WTO law.  

Many countries have already submitted their challenges to the tariffs before WTO, including Canada 

and the EU. They take stock in that what the U.S. has done is a violation of its WTO obligations. They 

complain America has promised to limit its tariffs on steel to 0 percent and to limit its tariffs on 

aluminum to between 0 and 6 percent on average. Secondly, they complain that the tariffs on steel and 

aluminum imposed by the U.S. have been applied to most countries in the world but not to four 

countries we mentioned above. We can summarize that the “Trump Tariffs” may have violated two 

fundamental principles in WTO law: one is “bound tariff rate” and the other is “Most Favored Nation” 

(MFN) treatment. 

 

2. Bound Tariff Rate 

The WTO applies itself to the removal or reduction of trade barriers. One of the most important trade 

barriers is tariff. Bound rate is the maximum rate of tariff that can be imposed by the importing country 

on an imported commodity. It is the MFN tariff rate rooting in negotiations under the GATT and is 

generated as a whole to become a country’s schedule of concessions to other WTO members. And no 

member country can raise its tariffs above the bound rate it has committed, that is to say, tariff rates 

actually applied must be lower than the bound rate. If a member raises its tariff rate higher than the 

bound rate it committed, other countries which are disadvantageously affected can seek remedy from 

the WTO and obtain the right to retaliate or to receive compensation. 

So there is another tariff rate called applied rate which is different from bound rate. The bound rate 

regulated in the schedule of concessions is the rate promised by WTO members that they will never 

exceed the tariff ceiling. The applied rate is the rate regulated in tariff schedules of each country and 

also, actually applied. There are various applied tariff rates imposed by countries all around the world. 

These rates vary from country to country and commodity to commodity. The principle of bound tariff 

rate is regulated in Article II of the GATT. 

There is a three-step test to see whether a tariff measure imposed is inconsistent with WTO bound rate 

principle. First, whether the treatment given to the commodities regarding the dispute is regulated in 

the schedule of concessions; Second, whether the treatment given to the commodities regarding the 



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dispute is related to the measures taken by the respondent country; and Third, whether these measures 

give rise to less favorable treatment of the commodities regarding the dispute than the respondent 

country committed in the schedule of concessions and particularly, whether these measures give rise to 

the imposition of tariffs on the commodities regarding the dispute in excess of the respondent country 

promised in the schedule of concessions. In short, if the tariff rate applied by the country is higher than 

the rate regulated in the schedule, there is a violation of the bound tariff rate principle and definitely it 

can constitute a violation of WTO Law. 

Just as we mentioned above, the tariffson steel of 25 percent and aluminum of 10 percent imposed by 

the Trump administration have been applied to most countries in the world. But previously, America 

promised to impose restrictions on its tariffs on steel and aluminum to a reasonable level. There is no 

doubt the implementation of “Trump Tariffs” on steel and aluminum is a violation of bound rate 

principle.  

 

3. MFN Treatment 

The “Most-Favored-Nation” (MFN) principle has been called the “cornerstone” principle of GATT for 

many years. The clause of it has also been included in the GATT, which prohibits discrimination 

among WTO members in regards to tariffs and other charges as well as domestic taxes. 

MFN treatment which has been a fundamental pillar of trade policy has a long history. Although the 

word first appeared in the seventeenth century, it can be traced back to the twelfth century. America 

included the MFN treatment clause in its 1778 treaty with France. From then on, the MFN treatment 

clause was included continually in various treatiesin the following centuries. And finally, after the 

Second World War, the clause of MFN treatment was regulated in the GATT, which became a general 

principle in a number of multilateral trade agreements. 

In WTO, if a member country accords the most favorable treatment to the product of the third country 

at the time of importation or exportation, the member country should accord the most favorable 

treatment to the like product of other member countries immediately and unconditionally. The 

requirements above regulated in GATT ArticleIis MFN treatment. Under the MFN treatment obligation 

in WTO law, if country A which is a WTO member has an agreement with country B, which need not 

necessarily be a WTO member, to reduce the tariff on product C, the same tariff should be applied to 

all other WTO members on like product of product C immediately and unconditionally. In a word, if a 

member accords favorable treatment to a country in regards to a particular issue, it must give all other 

members the same treatment in regards to the same issue. 

The question is how we can identify a conduct implemented by a country constitutes a violation of 

MFN treatment. Like the standard of the bound tariff rate, there are three steps to identify whether it 

constitutes a violation. First, whether there is an advantage, favor, or privilege and so on. Second, 

whether the advantage is offered to all like products of other members. Third, whether the advantage is 

offered immediately and unconditionally. If a conduct implemented by a country is inconsistent with 



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the requirements above, it constitutes a violation of MFN treatment. 

Coming back to the trump tariffs, we can see the Trump administration imposed tariffs on steel of 25 

percent and aluminum of 10 percent from most countries, including Canada, European Union, Mexico, 

China and so on. Only four countries in the world are exempted from these tariff measures. They are 

South Korea, Argentina, Australia and Brazil. So many countries have already challenged to the tariffs 

before WTO with arguments that America has violated WTO fundamental rules, such as MFN 

treatment. We can see, in accordance with the standard we mentioned, there definitely exists an 

advantage that four countries are exempted from the tariff policies on steel permanently. And of course, 

the advantage is not offered to all like products (steel and aluminum) of other countries in the world 

axiomatically including these countries which are WTO members. Let alone the third step, whether the 

advantage is offered immediately and unconditionally. So we can draw the conclusion that the 

imposition of “Trump Tariffs” on steel and aluminum by the U.S. constitutes a violation of “Most 

Favored Nation” (MFN) treatment in WTO rules. 

 

4. Conclusion 

Bound tariff rate and MFN treatment which are two fundamental principles in WTO law should be 

applied and observed among WTO members. Indeed, one purpose of the WTO is to ensure the free 

trade and fair trade all around the world. Through making schedule of concessions to identify the 

bound tariff rate, encouraging member countries to negotiate with each other to realize mutual 

beneficial tariff reductions, heartening members to accord most-favored-nation treatment to each other 

to ensure the fair trade and eliminate trade barriers, WTO devotes itself to establishing the energetic 

multilateral trading system and making it fair and free. With the increasingly rapid economic 

globalization and urbanization, WTO plays a significant role in the economic harmonization and 

integration. 

The imposition of “Trump Tariffs”, not only on steel and aluminum but on solar panels and washing 

machines and also on Chinese products, which has already given rise to the “China-United States trade 

war”, has definitely constituted a violation of WTO principles, including the violation of bound tariff 

rate and MFN treatment. At present, the United States is still one of the main constitutors of the world’s 

rules, and its every measure has an impact on the whole world. In the field of multilateral trade, on the 

one hand, through the tax reduction policies implemented by the Trump administration, the goods of 

the United States can be exported to other countries at a relatively low price, which will have adverse 

impacts on the domestic economy of other countries; on the other hand, if America imports products 

from other countries with a high tariff, the commodities from these countries will suffer a huge loss in 

American market. And also, automatically, countries like China will impose higher retaliatory tariffs on 

imports from the United States. If so, it could give rise to global trade wars. Such a situation is 

definitely harmful to the fair and free trade all around the world. 

 



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Besides the opposition from all around the world, the actions of tariffs imposed by the Trump 

administration were also criticized by most native economists and lawyers. For the purpose of realizing 

fair and free trade, the Trump administration should terminate the implementation of the “Trump 

Tariffs” and perform its obligations properly in multilateral trade all around the world and also, in 

WTO. 

 

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