Updated December 10, 2020
U.S. Trade Debates: Select Disputes and Actions
Introduction
partners maintain measures determined to be inconsistent
Since 2017, the United States and some of its major trading
with WTO rules.
partners have engaged in a contentious “war” of words over
Select Major U.S. Trade Disputes Prior
trade—one that tipped over into action in early 2018,
to the Trump Administration
mostly in the form of increased tariffs. The tariffs imposed
Below is a historic overview of 10 controversial U.S. trade
by the Trump Administration, combined with retaliatory
disputes. These cases demonstrate that since the creation of
measures adopted by other countries, are reportedly having
the GATT in 1947, the United States has, for the most part,
noticeable effects on trade flows and U.S. firms. Although
entered into negotiations to reduce trade barriers and has
the scale and scope of these recent unilateral U.S. tariff
imposed unilateral, restrictive trade measures in limited
increases are unprecedented in modern times, tensions and
instances.
irritants in international trade relations are not uncommon.
“Smoot-Hawley” Tariff Act (1930)
Over the last 100 years, the United States has been involved
The Tariff Act of 1930, commonly known as the “Smoot-
in a number of trade disputes. According to the World
Hawley” Tariff Act, is recognized by economists as having
Trade Organization (WTO), as of December 2020, the
triggered a global trade war—one that deepened the Great
United States is—or has been—involved in 280 trade
Depression. Originally meant to help heavily indebted
disputes (addressed through the WTO dispute settlement
farmers hit by falling commodity and land prices, the act’s
system), either as complainant or as a respondent. Most
scope was eventually expanded to include thousands of
disputes are settled, or when unresolved, are contained or
products from numerous sectors. While the United States
defused through bilateral and multilateral negotiations.
reduced its import dependence, other countries retaliated
Since the early 20th century, only one dispute has resulted in
with increased tariffs on their imports, and by 1933, U.S.
a worldwide tit-for-tat escalation of tariffs: the trade dispute
exports had declined by at least 60%. GATT negotiations
ignited by the U.S. “Smoot-Hawley” Tariff Act of 1930.
eventually reduced tariffs on a multilateral basis.
U.S.-EU “Chicken War” (1962)
The dispute, known as the “Chicken War,” began in 1962,
when the European Economic Community (EEC, a
predecessor to the European Union, EU) sharply raised its
common external tariff on poultry. The United States
retaliated in 1963 after consultations with the EEC failed to
resolve the dispute and a GATT dispute panel of experts
had convened. The United States raised tariffs on potato
starch, brandy, dextrine, and light trucks. The truck tariff
(25%)—still in place today—applies to all U.S. truck
imports, unless reduced or phased out by a U.S. free trade
agreement (FTA).
U.S.-Japan Trade Conflicts of the 1980s
As the Japanese economy, along with its auto industry, took
Addressing U.S. Trade Disputes
off, trade tensions between Japan and the United States
The United States has used unilateral measures and has
escalated significantly during the early 1980s. In an effort
engaged with trading partners in bilateral and multilateral
to persuade Congress not to legislate retaliatory measures,
fora to address trade-related concerns. U.S. federal statutes
both countries held intense bilateral consultations and
provide for trade remedy measures to address potential
reached agreements to try to improve market access for
adverse effects (i.e., material injury or threat thereof) on
U.S. products and limit auto imports. They negotiated
domestic industry of “unfair” foreign trade practices, such
several voluntary export restraint (VER) agreements, which
as antidumping (AD) and countervailing duties (CVD), or
required Japan to limit its auto (and steel) exports to the
to reduce the flow of fairly traded imports that threaten to
United States. Japan also agreed to increase U.S. imports
impair U.S. national security or cause serious injury or
and eliminate barriers to U.S. firms operating in Japan. (The
threat thereof (safeguard measures). In addition, the United
1995 WTO Agreement on Safeguards banned the use of
States has conducted bilateral discussions with many of its
informal measures like VER arrangements.)
trading partners to manage frictions over discrete issues and
U.S.-Canada Softwood Lumber Dispute (1980s)
achieve expanded market access for U.S. firms. More often,
Since the 1980s, there have been five major disputes or
the United States has resorted to the multilateral forum
“lumber wars” between the United States and Canada. The
provided by the WTO or its predecessor, the General
U.S. softwood lumber industry has alleged since 1982 that
Agreement on Tariffs and Trade (GATT), to settle trade
Canadian lumber exporters benefit from unfair subsidies.
disputes. As part of the dispute settlement process, WTO
After intense negotiations, in 1986 the United States and
members may seek authorization to retaliate if trading
Canada concluded the first of several agreements
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U.S. Trade Debates: Select Disputes and Actions
addressing the dispute. Subsequent agreements have been
George W. Bush Administration imposed tariffs against
reached and since expired, but negotiations on the subject
some steel imports. The measures were scheduled to be
remain ongoing.
phased down each year and abolished by 2005. Trading
Select Barriers to Market Access
partners protested the measures, pursuing WTO action. The
Tariffs: customs duties on merchandise imports.
WTO concluded that certain aspects of the U.S. measures
were inconsistent with U.S. WTO obligations, and in
Nontariff Barriers: measures in a form other than a tariff.
December 2003, the Bush Administration terminated the
Quotas: limits on the quantity or value of goods that can
safeguards.
be imported (or exported) during a specific time period.
Boeing-Airbus Subsidy Dispute (2004)
Technical Barriers to Trade: technical regulations, standards,
and testing and certification procedures.
The United States and the EU have long accused each other
of providing direct or indirect subsidies to their respective
Sanitary and Phytosanitary Measures: measures dealing
domestic civil aircraft industries, exemplified by Boeing
with food safety and animal and plant health.
and Airbus. Following decades of intense negotiations, both
Import Licensing Systems: administrative procedures for
sides resorted to the WTO dispute settlement system in
obtaining a permit for importing a product.
2005. In 2018 and 2019, after multiple phases of
Source: World Trade Organization, A Guide to “WTO Speak,” 2018.
proceedings, the WTO Appellate Body (AB) issued final
U.S.-EU Beef Hormone Dispute (1989)
decisions upholding earlier rulings that the EU and the
The United States and the EU have engaged in a long-
United States had not abided by WTO subsidies rules in
standing dispute over the EU’s decision to ban hormone-
supporting Airbus and Boeing, respectively. In response,
treated meat. In response to a 1989 EU ban, the United
after receiving WTO authorization to retaliate, the United
States imposed tariffs on some U.S. imports from the EU.
States imposed additional tariffs on $7.5 billion worth of
In 1996, both sides took the issue to the WTO, where a
U.S. imports from the EU (effective October 2019), while
dispute settlement panel ruled that the ban was inconsistent
the EU levied additional tariffs on $4.0 billion worth of EU
with WTO rules. When the EU failed to implement the
imports from the United States (effective November 2020).
panel’s recommendations, the United States obtained WTO
Both sides have contested each other’s tariff actions and
authorization to retaliate against EU products. Since 2009, a
expressed their desire to seek a negotiated solution to the
number of bilateral agreements have been reached under
dispute.
which the EU creates duty-free quotas for imports of
Chinese Tire Dispute (2009)
specially produced beef, in exchange for the elimination of
Between 2004 and 2008, U.S. imports of Chinese tires more
increased U.S. tariffs on U.S. imports from the EU.
than tripled. In 2009, the ITC conducted a special China-
U.S.-China Intellectual Property Rights (IPR) and
specific safeguard investigation and determined that
Market Access Disputes of the 1990s
imports of certain tires from China were harming U.S. tire
As the volume of U.S.-China trade grew substantially
producers. In response, the Obama Administration
between the late 1980s and early 1990s, the United States
increased tariffs for three years on imports of certain
increasingly raised concerns about IPR infringement in
Chinese tires. China challenged the U.S. duties at the WTO;
China. In 1991, the U.S. Trade Representative designated
the dispute settlement panel found that the United States
China as a Special 301 “Priority Foreign Country” and
had acted consistently with its WTO obligations. China
threatened it with significant retaliation. Between 1991 and
later imposed ADs and CVDs against certain U.S. autos, a
1994, both sides negotiated agreements committing China
move many believe was in retaliation to the tire dispute.
to taking steps to strengthen its IPR enforcement regime
Issues for Congress
and adopt more market-opening measures.
The above cases highlight that past trade disputes were
“Battle of the Bananas” (1990s)
more narrowly focused across products and trading
During the 1990s, the EU banana import regime was a
partners, settled or diffused through negotiations, and
primary source of U.S.-EU trade tension. The regime,
generally transient in nature. Since the establishment of the
instituted in 1993, granted preferential treatment to bananas
WTO, the United States has generally pursued bilateral and
from producers in the EU and former European colonies,
multilateral negotiations to address trade concerns, as well
which adversely affected U.S. banana firms. Following
as WTO dispute settlement. While some Members of
unsuccessful bilateral consultations, the United States
Congress may welcome the unilateral actions by the Trump
pursued the WTO dispute settlement process. In 1997, the
Administration or call for an even more active use of trade
WTO found that the EU regime was incompatible with the
restrictive measures, others may see it as an undesirable
EU’s WTO obligations. By 1999, as the EU had not
shift in U.S. trade policy. In either case, Congress could
implemented the WTO recommendations, the United States
consider amending delegated authorities to the President
received authorization from the WTO to retaliate against
under U.S. trade laws. It could also require congressional
EU imports. In 2001, both sides agreed to reform the EU
consultation or approval before new trade barriers are
banana regime and lift the U.S. retaliatory duties.
imposed, or request an economic impact study of how
Steel Tariffs (2002)
major trade actions may affect the U.S. economy, disrupt
Between 1997 and 2001, companies representing about
global supply chains, and weaken global trade rules.
one-third of U.S. steel capacity fell into bankruptcy. The
Andres B. Schwarzenberg, Analyst in International Trade
U.S. International Trade Commission (ITC) conducted a
safeguard investigation and determined that surging steel
and Finance
imports had caused serious injury. In response, in 2002 the
IF10958
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U.S. Trade Debates: Select Disputes and Actions
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https://crsreports.congress.gov | IF10958 · VERSION 10 · UPDATED