What's Happening?
The United States has launched an investigation into China's adherence to the 2020 trade agreement, which was initially hailed as a significant breakthrough by President Trump. The U.S. Trade Representative,
Jamieson Greer, announced the investigation, which coincides with President Trump's scheduled visit to Asia, where he plans to meet with Chinese President Xi Jinping. The investigation is being conducted under Section 301 of the Trade Act of 1974, aimed at addressing unfair trading practices. The U.S. accuses China of failing to meet its commitments, particularly in purchasing U.S. goods, as outlined in the Phase One deal. This agreement required China to increase its purchases of U.S. exports, including soybeans and other agricultural products. However, an analysis by the Peterson Institute for International Economics indicates that China only fulfilled 58% of its purchasing commitments in 2020 and 2021.
Why It's Important?
The investigation underscores ongoing trade tensions between the U.S. and China, two of the world's largest economies. The outcome could have significant implications for U.S. industries, particularly agriculture, which has been affected by China's reduced purchases. The investigation may lead to additional trade sanctions, further straining economic relations. The U.S. has already imposed substantial tariffs on Chinese goods, and the potential for increased tariffs could impact global supply chains and economic stability. The situation also highlights the broader geopolitical struggle for technological and economic dominance, with the U.S. accusing China of unfair practices such as technology theft and forced technology transfers.
What's Next?
The Office of the U.S. Trade Representative has scheduled a public hearing on December 16 to discuss the investigation. Depending on the findings, the U.S. may impose further trade sanctions on China. President Trump's meeting with President Xi Jinping could also influence the direction of negotiations and potential resolutions. Both countries have expressed a desire to ease tensions, but the U.S. has demanded that China increase its purchases of American goods as a condition for further talks. The outcome of these discussions could shape future trade policies and economic relations between the two nations.
