The WTO announced in Geneva that China may impose sanctions on U.S imports worth up to 3.6 billion dollars per year over anti-dumping measures that violated World Trade Organisation rules.
The case goes back to 2014 and is unrelated to the ongoing trade war between the two countries.
China criticised methods used by the U.S to investigate Chinese export practices and conclude that China was dumping.
WTO arbitrators ruled that some U.S methods were indeed in violation of WTO guidelines.
The Arbitrators also found that the U.S did not change its methods within a reasonable time frame, entitling China to impose compensatory sanctions with an amount determined by the WTO.
Dumping refers to the export of goods at a price that does not cover manufacturing costs. Its purpose can be to force competitors out of the market.
China recently announced sanctions against the U.S in another case won before the WTO.
The case concerned U.S tariffs for subsidies to state-owned enterprises in China that violated WTO rules.
The case dates back to 2012 and is still pending arbitration, China named a sum of 2.4 billion dollars.
In October, arbitrators at the WTO approved billions in punitive tariffs against the European Union over illegal subsidies for European aircraft manufacturer Airbus.
The U.S is also threatened with new EU punitive tariffs because it has not fully implemented WTO rulings concerning aircraft manufacturer Boeing.
The arbitration ruling on the amount is expected in 2020.