How can China respond to the Trump tariffs in a WTO-consistent manner?

The $50 billion tariffs proposed by the Trump Administration put China into a “Catch-22” position. If China doesn’t retaliate and only follows the proper dispute settlement procedure to challenge them in the WTO, then it has to wait at least 2 years before the US measures are finally ruled illegal by the WTO, while Chinese exports take a big hit. On the other hand, by retaliating with its own $50 billion list, China has committed prima facie violations of, inter alia, Arts. I.1 & II.1(a) of the GATT, and Art. 23 of the DSU.

Is there any way China may respond to the tariffs in a WTO-consistent manner? Some have looked beyond the covered agreements and refer to things such as self-defence under natural law, suspension of the operation of a treaty as a consequence of its breach under Art. 60 of the VCLT, and even waivers under Art. IX.3 of the WTO Agreement. But these all have problems. The first two obviously go beyond the covered agreements and are unlikely to provide sufficient justifications for blatant violations of explicit obligations under the covered agreements pursuant to the lex specialis principle. The last one, while theoretically possible, would backfire against China. As one of the largest, if not the largest, beneficiaries of the multilateral trading system, China’s interest lies in safeguarding the current WTO rules framework. Even if China may overcome the consensus requirement and successfully obtain the waiver to justify its suspension of obligations against the US, the US is likely to follow suit with its own waiver request against China. Then the EU, Japan, and who knows how many WTO Members would follow, as many believe that China takes unfair advantage of the multilateral trading system without shouldering corresponding responsibilities. If that happens, the US would essentially have gotten what they wanted, i.e., expelling China from the WTO and essentially put China back to the position of a country seeking accession, as it was 17 years ago.

Does that mean that there is no WTO-consistent way China could adopt to react to the Trump tariffs? I don’t think so and would propose the following:

1. Revoking existing visas and refusing to process new visa applications from US citizens. Some might say that this violates the GATS, but according to para. 4 of the GATS Annex on Movement of Natural Persons, visa issues are not covered by the GATS.

2. Imposing restrictions on trade or investment pursuant to Art. XVIII.B of the GATT, as the Trump tariffs are likely to create balance of payments difficulties for China;

3. Imposing restrictions on trade or investment pursuant to para. 2(a) of the GATS Annex on Financial Services, as the Trump tariffs are likely to endanger the integrity and stability of the financial system of China.

Of course, such measures might well lead to violations of China’s obligations under other international agreements, but at least they are (facially) consistent with the WTO and thus good enough for us trade lawyers to get a good night's sleep, which we badly need these days.