WTO Disputes Intensify as Canada, China Push Back on US Tariffs

Canada has formally requested dispute consultations with the United States at the World Trade Organization (WTO), following President Donald Trump’s decision to impose a 25% tariff on Canadian automobiles and auto parts. According to the WTO, Canada contends that the US measures are inconsistent with its obligations under multiple provisions of the General Agreement on Tariffs and Trade (GATT) 1994.

This move follows a similar action by China, which last week initiated a WTO dispute settlement case in response to US tariffs on Chinese products. China argues that the US measures not only damage its own economic interests but also undermine global trade flows and supply chain stability.

China’s Ministry of Finance announced the implementation of countermeasures in the form of a 34% tariff on all imports from the United States, effective April 10, 2025. The measure includes a provision exempting goods that depart before that date and arrive between April 10 and May 13, 2025.

Reciprocity Tariffs

On April 2, 2025, Trump declared a national economic emergency, imposing a universal 10% tariff on all imports, with higher rates targeting certain countries: Cambodia (49%), Vietnam (46%), China (34%), and the EU (20%). A notable measure included the imposition of a 25% tariff on all foreign-made automobiles, effective April 5, 2025. Auto parts will be levied similarly, with implementation expected on May 3.

Vehicle importers that qualify under USMCA can submit documentation verifying the value of US content in a specific model. This content is defined as “the value of parts wholly obtained, entirely produced, or significantly transformed in the United States.” The 25% tariff will apply only to the portion of the vehicle's value that does not originate from the United States, calculated by subtracting the verified US content from the total vehicle value. In 2024, Mexico exported US$181.4 billion in vehicles and auto parts to the United States, with finished vehicles representing US$78.5 billion.