THE Trump administration has formally rejected China’s demand that it be treated as a “market economy” under global trading rules, a move likely to heighten tensions between the world’s two largest economies, according to The Wall Street Journal.

The newspaper said that the U.S. Government submitted its decision to the World Trade Organization (WTO) in Geneva in mid-November and made it public Thursday.

Trump aides have long signaled their stance on the issue, but the filing marks the first time the U.S. Government has publicly declared its position and explained its reasoning, The Wall Street Journal report said.

The fight’s stakes are high. The trading partners of a country branded a “nonmarket economy” have wider discretion to impose higher duties on its exports on the theory that distortions from state intervention give its producers unfair advantages.

Economists have estimated that the decisions by the United States and European Union to treat China as a nonmarket economy have cost Chinese producers billions of dollars in exports, with some of their goods facing tariffs well above 100 percent.

Wang Hejun from China’s Ministry of Commerce said in a recent speech that the continuing refusal by the United States to grant China market economy status “undermines the seriousness and authority of multilateral rules.” He said China “will take necessary measures to protect legitimate benefits of its firms.”

The disputes pitting China against both the United States and the EU date to December. China argued at the WTO that the 2001 agreement granting its WTO membership required other members automatically treat China as a market economy by the 15th anniversary of its joining the organization. (SD-Agencies)