China to Sue U.S. at WTO Over New Tariffs, Vows Retaliation

China has announced plans to file a lawsuit against the United States at the World Trade Organization (WTO) in response to President Donald Trump’s decision to impose a 10% tariff on Chinese goods. The Chinese government also signaled further retaliatory measures, though it has yet to specify what those will be.

Trump signed executive orders over the weekend imposing the new tariffs, which take effect on February 4, citing the failure of China, Canada, and Mexico to curb the flow of narcotics such as fentanyl into the U.S. The new measures also apply to low-cost imports valued at $800 or less, a move expected to impact Chinese e-commerce giants Shein and Temu, which have used the exemption to ship large volumes of inexpensive goods to the American market.

China’s Ministry of Commerce condemned the tariffs, calling them a severe violation of WTO rules that disrupt economic and trade relations between the two nations. The ministry vowed to take “corresponding countermeasures” to safeguard China’s interests, although it remains uncertain how effective a WTO lawsuit would be, given the longstanding dysfunction of the organization’s dispute settlement mechanism due to U.S. opposition to appointing new judges.

Despite Beijing’s objections, analysts suggest the Trump administration is unlikely to be swayed by a WTO complaint. Steven Okun, CEO of APAC Advisors, noted that China’s legal challenge would have little impact on U.S. policy, adding that Chinese officials are aware of this reality.

Trump’s executive order also leaves the door open for additional tariff hikes if China retaliates, raising concerns of a renewed trade war similar to the tit-for-tat tariff battles during his first term. While China has not detailed its next steps, it has previously responded to U.S. trade pressure by restricting exports of critical minerals and adding American firms to its “unreliable entity list” over arms sales to Taiwan.

In a separate statement, China’s Ministry of Foreign Affairs reiterated its opposition to trade wars, arguing that no country benefits from tariff disputes. It also defended China’s anti-drug efforts, highlighting extensive cooperation with the U.S. that has yielded “significant results.”

While Trump had previously signaled a willingness to negotiate with Beijing, his latest tariff action caught some analysts off guard, leading to a sharp sell-off in U.S.-listed Chinese stocks on Friday. However, the current 10% tariff remains far below the 60% rate Trump had threatened during his campaign, suggesting that further negotiations with Chinese President Xi Jinping could still be on the table.

Economists believe the tariff increase is unlikely to severely impact China’s economy in the short term. Zhiwei Zhang, president of Pinpoint Asset Management, described it as “not a big shock” but warned that trade negotiations between the two nations would likely be drawn out, with the possibility of further tariff escalations in the future.