The U.S. Response to China's Retaliation: What Role for the DSU?

Here is the U.S. response to China's decision to deem the Section 232 tariffs a safeguard measure and to impose tariffs pursuant to provisions of the Safeguards Agreement:

The United States has received China's requests for consultations under Article 12.3 of the Agreement on Safeguards with respect to the Proclamations issued with respect to steel and aluminum on 8 March 2018.

The United States notes that the premise for China's requests for consultations under Article 12.3 of the Agreement on Safeguards is that the Steel and Aluminum Proclamations are safeguard measures for purposes of that Agreement. The President issued the Steel and Aluminum Proclamations pursuant to Section 232 of the Trade Expansion Act of 1962, under which the President determined that tariffs are necessary to adjust imports of steel and aluminum articles that threaten to impair the national security of the United States. These actions are not safeguard measures, and therefore, there is no basis to conduct consultations under the Agreement on Safeguards with respect to these measures.

The United States did not take action pursuant Section 201 of the Trade Act of 1974, which is the law under which the United States imposes safeguard measures. It did not submit notifications with respect to these measures because they are not safeguard measures. As evidenced by our recent notifications with respect to solar products and washers, the United States is well aware of its notification obligations for safeguards measures under the Agreement on Safeguards.

Article 12.3 of the Agreement on Safeguards states that a "Member proposing to apply or extend a safeguard measure shall provide adequate opportunity for prior consultations" with Members having a substantial interest in exports of the product concerned. However, the United States is not proposing "to apply or extend a safeguard measure" with respect to steel or aluminum, and therefore Article 12.3 does not apply. Accordingly, China's requests for consultations pursuant to Article 12.3 have no basis in the Agreement on Safeguards. The United States has taken note of China's notification of 29 March 2018, in which China stated its intent to suspend concessions and other obligations, purportedly under Article 8.2 of the Agreement on Safeguards. We note further that China put these measures into effect on 2 April 2018. Because the actions under the Steel and Aluminum Proclamations are not safeguard measures, the United States considers that Article 8.2 of the Agreement on Safeguards does not justify China's suspension of concessions or other obligations. China has asserted no other justification for its measures, and the United States is aware of none. Therefore, it appears that China's actions have no basis under WTO rules.

Should China still have questions related to U.S. actions under Section 232 of the Trade Expansion Act of 1962, we nevertheless stand ready to fix a mutually convenient date with China to engage in bilateral discussions. Such discussions would not be held pursuant to the Agreement on Safeguards and would be without prejudice to our view that the Proclamations are not safeguard measures.

(footnotes omitted)

As noted in the comments here, I agree with the U.S. view of this. But here's my question: Is the U.S. going to file a complaint against China under the DSU? What role will WTO dispute settlement play in this escalating tariff battle?