As the meeting between former President Trump and the Chinese Communist Party leader Xi Jinping planned in South Korea next week approaches, the U.S. government is set to launch an investigation into Beijing’s compliance with the 2020 trade agreement. This move could pave the way for the White House to impose further tariffs on Chinese imports and add a new tension factor to the Trump-Xi meeting.
According to reports from The New York Times and The Wall Street Journal citing knowledgeable sources, the Office of the U.S. Trade Representative is preparing to initiate a new investigation into how the Chinese government fulfills its commitments in the Phase One trade deal signed during President Trump’s first term.
The investigation is expected to be announced as early as Friday morning, with the first step being to solicit opinions from U.S. industries and unions.
This investigation will be conducted under the Section 301 of the Trade Act of 1974, which allows the federal government to probe foreign trade practices and impose tariffs in response to unfair trade behaviors. During Trump’s first term, this section was used as the rationale for levying tariffs on Chinese goods.
While the new investigation could lead to additional tariff imposition, such probes usually take several months to complete, and no decision on imposing new tariffs has been made yet.
Previously, Trump and his economic team have repeatedly criticized China for not fulfilling the commitments of the Phase One trade agreement signed in 2020. They also blamed the Biden administration for not rigorously enforcing the deal.
On the other hand, Beijing has argued that the outbreak of the COVID-19 pandemic shortly after the agreement was signed rendered many terms impossible to be implemented.
Disputes over these issues have reignited following the breakdown of the trade truce between the two sides.
In recent months, due to ongoing tariffs and trade disputes, China has shifted its purchases of soybeans and other agricultural products from the U.S. to other countries.
Currently, the U.S. government has imposed tariffs of at least 55% on most Chinese exports, with even higher tariffs on certain products.
Recently, President Trump also stated that if the U.S. and China fail to reach a new trade agreement, additional tariffs of 100% will be imposed on Chinese goods, citing Beijing’s tight control over rare earth mineral exports globally.
The timing of the White House’s initiation of the new investigation is attention-grabbing. On Thursday (October 23), the White House announced that Trump and Chinese leader Xi Jinping plan to meet in South Korea on October 30. The date of the meeting is less than a week away from when the investigation could be announced.
An individual familiar with government plans stated that the U.S. is taking this action to demonstrate that it will not tolerate non-compliance with agreements, whether signed by Trump and Xi Jinping or with other foreign leaders.
It is anticipated that Trump will urge Xi Jinping to purchase more American agricultural products during next week’s meeting, while also discussing export controls on critical American industrial goods, such as rare earth magnets, and tariff issues.
Some analysts believe that reopening the scrutiny of China’s unfulfilled commitments in the Phase One agreement ahead of this meeting in Washington may provoke Beijing. This could potentially introduce new tensions into the meeting between the two leaders.