Even amid all the trade chaos, the Trump/Vance administration’s actions still don’t remotely resolve one of the fundamental complaints U.S. companies have about China: Beijing’s heavily state-directed economic model gives favored Chinese companies advantages their market-based competitors don’t enjoy.
When China joined the WTO in 2001, many Western policymakers hoped integration into the global trading system would push Beijing toward a more market-oriented economy. Instead, China remains heavily reliant on state-owned enterprises, industrial policy, preferential financing and government subsidies. WTO members continue to complain about inadequate subsidy transparency, state intervention and policies that contribute to global overcapacity.
Steel is a prime example. According to the Organization for Economic Cooperation and Development (OECD), Chinese steelmakers receive substantially more government support than competitors elsewhere. As Chinese domestic demand has weakened, more of that production has gone overseas: Chinese steel exports reached a record 131 million metric tons in 2025, putting additional pressure on manufacturers and prices around the world.
China’s frustrating trade practices extend beyond subsidies. U.S. officials continue to raise concerns about forced or pressured technology transfers, discriminatory intellectual-property policies and alleged state-supported cyber theft of commercial information. China also manages its currency closely; although the U.S. Treasury does not currently label China a currency manipulator, the International Monetary Fund (IMF) has concluded that the renminbi is undervalued in real terms.
These are precisely the kinds of problems that demand a coordinated response. The WTO provides a multilateral, rules-based trading system covering 166 countries and roughly 98 percent of world trade, along with mechanisms for challenging subsidies, discrimination and other violations.
And this may be an unusually good time to do so, because America is no longer alone in complaining about China’s economic model. As trade with the United States weakened, China increasingly redirected exports elsewhere. In 2025, Chinese exports to the U.S. fell roughly 20 percent, while exports increased 8.4 percent to the European Union, 13.4 percent to ASEAN countries and 25.8 percent to Africa. China finished the year with a record trade surplus of nearly $1.2 trillion.
That means other countries are increasingly being asked to absorb China’s surplus production. Cheap imports benefit consumers, but massive flows of subsidized goods can also squeeze domestic manufacturers, depress prices and discourage investment.
Europe has certainly noticed. At the July 2025 EU-China summit, European leaders told Xi Jinping that the trading relationship had become “critically unbalanced,” citing manufacturing overcapacity, market distortions and unequal access to China’s market. French President Emmanuel Macron subsequently warned that the imbalance was becoming unsustainable.
Then, in February 2026, German Chancellor Friedrich Merz delivered essentially the same message in Beijing. He called on China to reduce market-distorting subsidies and industrial overcapacity, open its markets further, allow greater flexibility in its currency and improve access to raw materials and critical minerals.
In other words, this is no longer just an American complaint. Many of China’s major trading partners increasingly share the same concerns… which creates an opportunity. Rather than fighting its trading partners one by one, the United States should be building a coalition of market economies and using the WTO to confront Chinese subsidies, overcapacity and discriminatory trade practices collectively. There is strength in numbers – and when it comes to China, America has more potential allies than adversaries.
For example, the WTO could set rules on how to detect market distortion, along with how to properly monitor and punish it. Same goes with state subsidies. The WTO can do this through “plurilateral” agreements which have a narrower group of signatories, in this case a group of the larger WTO economies.
It probably won’t come as a galloping shock that Donald Trump doesn’t care much for the WTO, saying it’s “a disaster,” “rigged” against the United States, and that we must “do something about the WTO because they’ve let China get away with murder.”
But the record tells a different story. The Economic Report of the President for 2018, signed by none other than President Donald Trump himself, said that “the United States had won 85.7 percent of the cases it had initiated before the WTO since 1995, compared with a global average of 84.4 percent. In contrast, China’s success rate was just 66.7 percent.”
A 2019 analysis by the Peterson Institute the following year revealed that, “Contrary to President Trump’s assertion that ‘We lose the lawsuits, almost all the lawsuits in the WTO,’ U.S. officials have won 20 times in their challenges to Chinese trade practices since the first U.S. WTO case against China in 2004. None were lost, and three cases are still pending. Chinese officials have brought 16 complaints against the United States since 2002 and won five, lost one, and gotten a split decision on three, with seven cases pending.”
It also won’t come as a galloping shock that we believe President Trump is deeply misguided on this. To us, one of the most important functions of the WTO is the appellate body that essentially functions as the Supreme Court for international trade. As designed, this body hears appeals regarding decisions by lower WTO dispute settlement panels (which provides a mechanism to challenge unfair trade practices). Historically, around two-thirds of all WTO disputes reach the appellate body, and its rulings are binding on WTO member states. There are seven seats on the appellate body, and the rules require at least three judges appear to form a panel to adjudicate a given dispute.
… and herein lies the problem. The Appellate Body effectively stopped functioning on December 11, 2019, when it fell below the three members needed to hear an appeal. Beginning in the Obama administration, the United States started blocking all new appointments to the appellate body as the terms of its judges expired. Without a functioning appellate body to hear cases, the entire process has broken down. As of August 2026, the United States had blocked a motion to fill these vacancies 92 times in a row.
This is ridiculous. Do Presidents Obama, Biden and Trump not understand that, far from looking savvy, they look foolish because they did nothing more than allow China’s transgressions to go unchecked for years? How does it make sense that a system in which the United States historically won the overwhelming majority of the cases it brought – including an extraordinary record against China – was effectively disabled in significant part by the United States itself?
Look, the WTO is far from perfect and there are legitimate concerns about judicial overreach, missed deadlines, and the body exceeding its mandate. But disabling the appeals system without replacing it with something better weakened one of the most useful mechanisms the United States had for holding China accountable.
Now is the time the United States should be leading an effort with Europe, Japan and other major trading partners to reform WTO dispute settlement, strengthen rules governing industrial subsidies and state-owned enterprises, and confront China collectively… you know… actually LEAD SOMETHING AGAIN!