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The Trump administration is preparing to launch a new trade investigation into China’s failure to comply with the terms of a 2020 trade agreement.
According to sources familiar with the matter, this step could increase tensions between the US and China and pave the way for new customs duties.
As relations between the world’s two largest economies have become increasingly strained in recent weeks, the move is seen as an attempt by the US to strengthen its position ahead of a planned meeting between President Donald Trump and Chinese President Xi Jinping as part of an international meeting in South Korea next week.
The investigation could reportedly be announced tomorrow by the U.S. Trade Representative (USTR) under Section 301 of the Trade Act of 1974. This section gives the U.S. administration the authority to investigate foreign countries’ trade practices and, if necessary, take retaliatory action.
The Trump administration is currently imposing tariffs of at least 55% on goods imported from China. For some products, these tariffs have reached much higher levels. After China imposed new restrictions on rare earth exports in recent months, Trump announced that he could impose an additional 100% tariff on Chinese goods starting November 1st.
Trump and Xi are expected to meet face-to-face at an international summit in South Korea on October 30.
Under the 2020 trade agreement, China pledged to purchase $200 billion worth of additional goods and services from the US, provide easier market access for American companies, and protect intellectual property rights. However, analysis has revealed that China failed to implement these additional purchases. The agreement’s entry into force immediately after the pandemic led to a decline in Chinese imports from the US.
*This is not investment advice.
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