China has accused the U.S. of using "unfounded and false allegations" about its involvement in the fentanyl trade as a pretext for imposing tariffs on Chinese goods.
The complaint was submitted to the World Trade Organization (WTO) a day after U.S. President Donald Trump increased border taxes on Chinese goods by 10%, claiming the move aimed to curb illegal drug inflows.
In its filing, China argued that the measures were "discriminatory and protectionist" and violated trade regulations.
However, experts caution that China is unlikely to win the case, as the WTO’s trade dispute panel remains non-functional. A former WTO official told the BBC it has "no possibility of succeeding."
The dispute comes as Trump's plans for tariffs - a tax he has said he wants to see imposed on all foreign shipments into the country - are causing uncertainty across the global trade landscape.
Trump has said tariffs will encourage firms to make their products in the US, repeatedly expressing concern about the size of America's trade deficit.
But his actions against China - which he has threatened to widen to include Canada, Mexico and Europe - have sparked concerns about their impact on the global economy, including in the US, as businesses respond to trade uncertainty by holding off on investments or pass on new costs to customers.
US imports hit their highest on record in December as businesses responded to the threats of tariffs, racing to secure foreign-made toys, mobile phones and computers.
The value of goods brought into the US jumped 4% from November to $293.1bn (£234.4bn), the highest since records began in 1992, the Commerce Department said on Wednesday.
The rise also contributed to the widest trade deficit, or gap, between exports and imports in nearly two years.
The tariffs have also provoked political tension, including retaliation from China, which responded to Trump's move with tariffs on US goods and an anti-monopoly probe of Google, among other measures.
The speed with which China filed its complaint with the WTO is an indication of Beijing's readiness for the trade fight.
WTO procedures give the US and China 60 days to resolve their dispute through consultations, at which point China has the right to request adjudication by a panel of judges.
But the final WTO panel that settles trade disputes - known as the appellate body - remains unable to function, as the US refuses to approve the appointment of new judges to the body.
The US also ignored a previous finding by the WTO that earlier tariffs on steel and aluminium that were imposed during Trump's first term were against the rules.
China ranked as the county with the biggest deficit in goods in December, sending $25.3bn more into the US than it purchased.
The European Union, a target of Trump's tariff threats, had the second largest gap.
By contrast, the US enjoyed a small surplus of $2.3bn in goods trade with the UK.
Overall, the trade deficit in the US, including services, rose 17% last year to a total of $918.4bn, as imports increased faster than exports.
In December, the trade deficit in goods and services was $98.4bn, the highest since March 2022, the Commerce Department said.
Source: BBC
BDST: 1159 HRS, FEB 06, 2025
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