Trump admin ramps up economic measures against China amid rising tensions

US-China trade war: China has strongly condemned Washington's actions, accusing the US of politicising and weaponising economic and trade relations

The Trump administration has intensified its economic and trade actions against China, introducing a series of policies that restrict Chinese investment, trade practices, and strategic industries. These measures, which include tighter controls on Chinese spending in vital US sectors and additional tariffs, could further strain relations between the world’s two largest economies, Bloomberg reports.

 

Investment curbs

President Donald Trump has reportedly directed the Committee on Foreign Investment in the United States, a US inter-agency body assessing foreign investments for national security risks, to increase scrutiny of Chinese acquisitions in technology, energy, and infrastructure.

 

The administration argues these steps are needed to protect “key assets vital to US national security and economic independence.”

 

 

A White House memo labelled China a ‘foreign adversary’, emphasising the need to safeguard critical industries like food supplies, natural resources, and maritime infrastructure.

 

It also proposed reviewing the 1984 US-China tax treaty and re-examining ‘variable interest entities’ (VIEs), a structure used by Chinese firms to list shares on US exchanges.

 

Tariffs and trade restrictions

The US has urged Mexico to impose tariffs on Chinese imports, following reports that Chinese manufacturers were relocating production to Mexico to bypass American duties. Additionally, the administration has proposed imposing fees on the use of Chinese commercial vessels, aiming to counter China’s dominance in global shipping.

 

These measures follow the imposition of a fresh 10 per cent tariff hike on Chinese goods, which covers the full range of Chinese exports to the US. The administration has linked these tariffs to concerns over China’s role in the production of chemical precursors used to manufacture illicit fentanyl, a drug contributing to the opioid crisis in the United States.

 

Russia-Ukraine war negotiations

Trump’s economic crackdown on China comes as his administration works to negotiate an end to the ongoing war in Ukraine, a process that has involved high-level discussions with Russian President Vladimir Putin.

 

The report by Bloomberg suggests that recent remarks from key figures within the Trump administration, including Defence Secretary Pete Hegseth and Donald Trump Jr, may signal that Washington aims to shift its strategic focus towards China following talks with Russia.

 

China’s response and retaliation

In response to US tariffs, China has imposed its own set of trade restrictions, albeit on a smaller scale. Beijing has also dismissed US accusations regarding its role in the fentanyl trade, calling them a ‘pretext’ for economic sanctions.

 

Beijing has strongly condemned Washington’s actions, accusing the US of politicising and weaponising economic and trade relations. China’s Ministry of Commerce, in a statement on Sunday, warned that heightened scrutiny of Chinese investments in the US would significantly erode confidence among Chinese firms seeking business opportunities in North America.

 

The downturn in Chinese investment in North America, which hit record lows at the end of last year, reflects uncertainty among Chinese businesses as they await further clarity on Trump’s economic policies.

 

Vice Premier He Lifeng recently raised “serious concerns” about the US tariff increases in a call with Treasury Secretary Scott Bessent, who, in turn, criticised China for what he called “economic imbalances”.

 

Trump open to new trade agreement with China

Despite the mounting economic hostilities, Trump has left open the possibility of a new trade agreement with China, stating that “it’s possible” a deal could be reached. However, with China’s trade surplus with the US standing at approximately $295 billion and growing concerns over intellectual property rights and supply chain security, any future negotiations are expected to be fraught with challenges.