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WASHINGTON. — President Trump’s “America First” policy drew strong pushback on two fronts on Tuesday, as the World Trade Organisation sided with China in a legal challenge to US tariffs and Canadian threats of retaliation led the United States to abandon plans for a fresh set of import taxes.

The pair of developments coupled with the release earlier this month of data showing the trade deficit at its worst point in 12 years reflected the incomplete state of the president’s promised globalisation overhaul seven weeks before he faces voters.

A three-member WTO panel struck at the core of Trump’s trade war on China, ruling that the tariffs he imposed more than two years ago on $234 billion worth of Chinese goods ran afoul of US commitments under global trading rules.

The ruling will have no immediate impact on US customs officials’ ability to collect the levies from American importers, but it represents a diplomatic dent in the president’s trade offensive.

Several hours later, the administration said it was abandoning a tariff on aluminum from Canada that the president had imposed just last month, settling instead for making public its expectation that imports will decline. The move came hours before Chrystia Freeland, Canada’s deputy prime minister, who had vowed a “dollar for dollar” response, was expected to announce retaliatory tariffs on American products.

“Both actions reflect the iron law of trade retaliation. When the US imposes import taxes on foreign goods, other countries will hit back,” said John Veroneau, a partner at Covington & Burling and a former US trade negotiator in the administration of President George W Bush.

That view has not always been accepted by senior Trump administration figures. In 2018, Peter Navarro, one of the president’s closest trade advisers, insisted that US trading partners would not respond if the president made their products more expensive for buyers.

“I don’t believe any country is going to retaliate for the simple reason that we are the most lucrative and biggest market in the world,” Navarro told Fox Business. “They know they are cheating us, and all we are doing is standing up for ourselves.”

The administration had argued before the WTO that its tariffs were needed to curb years of trade cheating by China. But in a 66-page report, the panel rejected that claim.

“The United States has not met its burden of demonstrating that the measures are justified,”  the panel concluded. – The Washington Post.