Updated January 3, 2023
U.S. Trade Debates: Select Disputes and Actions
Introduction
disputes. As part of the dispute settlement process, WTO
During the Trump Administration, the United States and
members may seek authorization to retaliate if trading
some of its major trading partners engaged in a contentious
partners maintain measures determined to be inconsistent
“war” of words over trade—one that tipped over into action
with WTO rules.
in 2018, mostly in the form of increased tariffs. The tariffs
Select Major U.S. Trade Disputes Prior
imposed by the United States, combined with retaliatory
to 2017
measures adopted by other countries (particularly with
Below is a historic overview of 10 controversial U.S. trade
respect to China), reportedly continue to have noticeable
disputes over various trade barriers (see text box). These
effects on trade flows and U.S. firms. To date, a number of
cases demonstrate that since the creation of the GATT in
disputes related to these actions have not been fully
1947, the United States, for the most part, has entered into
resolved. While the scale and scope of these unilateral U.S.
negotiations to reduce trade barriers and has imposed
tariff increases are unprecedented in modern times, tensions
unilateral, restrictive trade measures in limited instances.
and irritants in trade relations are not uncommon.
“Smoot-Hawley” Tariff Act (1930)
During the last 100 years, the United States has been
The Tariff Act of 1930, commonly known as the “Smoot-
involved in a number of trade disputes. According to the
Hawley” Tariff Act, is recognized by economists as having
World Trade Organization (WTO), as of December 2022,
triggered a global trade war—one that deepened the Great
the United States has been involved in 281 trade disputes
Depression. Originally meant to help heavily indebted
(addressed through the WTO dispute settlement system
farmers hit by falling commodity and land prices, the act’s
since 1995), either as a complainant or 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, one dispute has resulted in a
with increased tariffs on their imports, and by 1933, U.S.
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.-European Union (EU) “Chicken War” (1962)
The dispute, known as the “Chicken War,” began in 1962,
when the European Economic Community (EEC, a
predecessor to the 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 (1980s)
As the Japanese economy, along with its auto industry, took
off, trade tensions between Japan and the United States
Addressing U.S. Trade Disputes
escalated significantly during the early 1980s. In an effort
The United States has used unilateral measures and has
to persuade Congress not to legislate retaliatory measures,
engaged with trading partners in bilateral and multilateral
both countries held intense bilateral consultations and
fora to address trade-related concerns. U.S. federal statutes
reached agreements to try to improve market access for
provide for trade remedy measures to address potential
U.S. products and limit auto imports. They negotiated
adverse effects (i.e., material injury or threat thereof) on
several voluntary export restraint (VER) agreements, which
domestic industry of “unfair” foreign trade practices, such
required Japan to limit its auto (and steel) exports to the
as antidumping (AD) and countervailing duties (CVD), or
United States. Japan also agreed to increase imports from
to reduce the flow of fairly traded imports that threaten to
the U.S. and eliminate barriers to U.S. firms operating
impair U.S. national security or cause serious injury or
there. (The subsequent 1995 WTO Agreement on
threat thereof (safeguard measures). In addition, the United
Safeguards banned the use of measures like VERs.)
States has conducted bilateral discussions with many of its
U.S.-Canada Softwood Lumber Dispute (1980s)
trading partners to manage frictions over discrete issues and
Since the 1980s, there have been five major disputes or
achieve expanded market access for U.S. firms. More often,
“lumber wars” between the United States and Canada. The
the United States has resorted to the multilateral forum
U.S. softwood lumber industry has alleged since 1982 that
provided by the WTO or its predecessor, the General
Canadian lumber exporters benefit from unfair subsidies.
Agreement on Tariffs and Trade (GATT), to settle trade
After intense negotiations, in 1986 the United States and
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U.S. Trade Debates: Select Disputes and Actions
Canada concluded the first of several agreements on the
some steel imports. The measures were scheduled to be
issue. Subsequent agreements have been reached and since
phased down each year and abolished by 2005. Trading
expired, but negotiations on the subject remain ongoing.
partners protested the measures, pursuing WTO action. The
Common Trade and Market Access Barriers
WTO concluded that certain aspects of the U.S. measures
Tariffs: customs duties on merchandise imports.
were inconsistent with U.S. WTO obligations, and in 2003,
the Bush Administration terminated the safeguards.
Nontariff Barriers: measures in a form other than a tariff.
U.S.-EU Boeing-Airbus Subsidy Dispute (2004)
Quotas: limits on the quantity or value of goods that can
be imported (or exported) during a specific time period.
The United States and the EU have long accused each other
of providing direct or indirect subsidies to their respective
Technical Barriers to Trade: technical regulations,
standards, and testing and certification procedures.
domestic civil aircraft industries, exemplified by Boeing
and Airbus. Following decades of intense negotiations, both
Sanitary and Phytosanitary Measures: measures dealing
sides resorted to the WTO dispute settlement system in
with food safety and animal and plant health.
2005. In 2018 and 2019, after multiple phases of
Import Licensing Systems: administrative procedures for
proceedings, the WTO Appellate Body (AB) issued final
obtaining a permit for importing a product.
decisions upholding earlier rulings that the EU and the
Source: World Trade Organization, A Guide to “WTO Speak,” 2018.
United States had not abided by WTO rules in supporting
U.S.-EU Beef Hormone Dispute (1989)
Airbus and Boeing, respectively. In response, after
The United States and the EU have engaged in a long-
receiving WTO authorization to retaliate, the United States
standing dispute over the EU’s decision to ban hormone-
imposed additional tariffs on $7.5 billion worth of U.S.
treated meat. In response to a 1989 EU ban, the United
imports from the EU, while the EU levied additional tariffs
States imposed tariffs on some U.S. imports from the EU.
on $4.0 billion worth of EU imports from the United States.
In 1996, both sides took the issue to the WTO, where a
In June 2021, both sides announced an “Understanding on a
dispute settlement panel ruled that the ban was inconsistent
Cooperative Framework for Large Civil Aircraft” and
with WTO rules. When the EU failed to implement the
agreed to suspend their retaliatory tariffs for five years.
panel’s recommendations, the United States obtained WTO
U.S.-China Tire Dispute (2009)
authorization to retaliate against EU products. Since 2009, a
Between 2004 and 2008, U.S. imports of Chinese tires more
number of bilateral agreements have been reached under
than tripled. In 2009, the ITC conducted a special China-
which the EU creates duty-free quotas for imports of
specific safeguard investigation and determined that
specially produced beef, in exchange for the elimination of
imports from China were harming U.S. tire producers. In
increased U.S. tariffs on imports from the EU.
response, the Obama Administration increased tariffs for
U.S.-China Intellectual Property Rights (IPR) and
three years on imports of certain Chinese tires. China
Market Access Disputes (1990s)
challenged the U.S. duties at the WTO; the dispute
As the volume of U.S.-China trade grew substantially
settlement panel found that the United States had acted
between the late 1980s and early 1990s, the United States
consistently with its WTO obligations. China later imposed
increasingly raised concerns about IPR infringement in
AD duties and CVDs against certain U.S. autos, a move
China. In 1991, the U.S. Trade Representative designated
many believed was in retaliation to the tire dispute.
China as a Special 301 “Priority Foreign Country” and
Issues for Congress
threatened it with significant retaliation. Between 1991 and
The above cases highlight that past trade disputes have
1994, both sides negotiated agreements committing China
generally been narrowly focused across products and
to taking steps to strengthen its IPR enforcement regime
trading partners, settled or diffused through negotiations,
and adopt more market-opening measures.
and generally transient in nature. Since the establishment of
U.S.-EU “Battle of the Bananas” (1990s)
the WTO, the United States has generally pursued bilateral
During the 1990s, the EU banana import regime was a
and multilateral negotiations to address trade concerns, as
primary source of U.S.-EU trade tension. The regime,
well as WTO dispute settlement. Some Members of
instituted in 1993, granted preferential treatment to bananas
Congress supported the unilateral actions of the Trump
from producers in the EU and former European colonies,
Administration, which it justified by pointing to alleged
which adversely affected U.S. banana producers and
weaknesses in WTO dispute settlement procedures and the
distributors. Following unsuccessful bilateral consultations,
inadequacy or nonexistence of WTO rules to address
the United States pursued WTO dispute settlement. In 1997,
certain foreign trade practices. Others viewed the unilateral
the WTO found that the EU regime was incompatible with
approach as an undesirable shift in U.S. trade policy. As
the EU’s WTO obligations. By 1999, as the EU had not
Congress continues to engage with the Biden
implemented the WTO recommendations, the United States
Administration to chart the next phase of U.S. trade policy,
received authorization from the WTO to retaliate against
it could require greater congressional consultation before
EU imports. In 2001, both sides agreed to reform the EU
new trade restrictions are imposed. Members may also
banana regime and lift the U.S. retaliatory duties.
encourage the Administration to continue working closely
Steel Tariffs (2002)
with allies to address trade concerns, improve the
Between 1997 and 2001, companies representing about
functioning of the WTO, and address emerging issues that
one-third of U.S. steel capacity fell into bankruptcy. The
existing multilateral trade rules may not cover adequately.
U.S. International Trade Commission (ITC) conducted a
Andres B. Schwarzenberg, Analyst in International Trade
safeguard investigation and determined that surging steel
imports had caused serious injury. In response, in 2002 the
and Finance
George W. Bush Administration imposed tariffs against
IF10958
https://crsreports.congress.gov
U.S. Trade Debates: Select Disputes and Actions
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https://crsreports.congress.gov | IF10958 · VERSION 16 · UPDATED