(Bloomberg) — The Trump administration is launching a trade investigation that opens the door to new tariffs on Chinese goods, ratcheting up tensions ahead of a highly anticipated summit next week between the countries’ leaders.
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US Trade Representative Jamieson Greer on Friday announced the opening of a probe into whether China complied with a limited trade agreement reached in 2020 during President Donald Trump’s first term.
The investigation “will examine whether China has fully implemented its commitments under the Phase One Agreement, the burden or restriction on U.S. commerce resulting from any non-implementation by China of its commitments, and what action, if any, should be taken in response,” the agency said Friday in a statement.
The move threatens to exacerbate strained relations between Washington and Beijing, and could serve as another point of leverage for Trump in his meeting next Thursday with Chinese President Xi Jinping in South Korea.
The probe is being conducted under Section 301 of the Trade Act of 1974, which allows the administration to adjust imports from countries deemed to have adverse trade practices. Those investigations typically last several months, or more, but serve as the legal basis for the president to unilaterally impose tariffs.
Trump’s first-term trade deal with China was based in part on Beijing’s pledges to boost purchases of US agricultural products, a source of renewed tension this year.
Liu Pengyu, a spokesperson for the Chinese embassy in Washington, posted on X that China has “Scrupulously Honored the Phase One Economic and Trade Agreement” while the US has “Failed to Meet Its Obligations,” pointing to a white paper the Chinese government published in April.
Meanwhile, a 2024 study commissioned by the National Corn Growers Association and the American Soybean Association said China “fell short” of its Phase One obligation to purchase $80 billion of US agricultural products over 2020 and 2021. Instead, according to the study, China purchased only $59.2 billion of products in that time, in part because of logistical issues stemming from the Covid-19 pandemic.
Global react: China Likely to Fail US Phase 1 Test — What Next?
The US and China have engaged in a tit-for-tat trade fight since Trump returned to office, which has reignited in recent weeks despite a truce that lowered levies between the two countries to allow for more negotiations. That pause on higher tariffs is set to expire mid-November.
