The US also proposed fees on the use of China’s commercial ships to counter the nation’s dominance in the production of the vessels. Chinese shipping stocks fell after the proposal, while the benchmark CSI 300 Index fluctuated.
Taken together, the steps amount to the most sweeping, forceful action targeting China that Trump has rolled out during his second term. The memo with the order to the Committee on Foreign Investment in the United States — a secretive panel that scrutinizes proposals by foreign entities to buy US companies or property – seems to be the most impactful of the flurry of actions in recent days.
Referring to Beijing as a “foreign adversary,” it says the changes are needed to protect “the crown jewels of United States technology, food supplies, farmland, minerals, natural resources, ports, and shipping terminals.”
The memorandum also says the US government should also review a 1984 tax deal with China that frees individuals and companies from double taxation, and an arrangement known as “variable interest entity” that Chinese firms use to list on American exchanges.Afterward, Beijing urged Washington to stop politicizing and weaponizing economic and trade issues. The US government’s push to strengthen reviews of business ties on security grounds would seriously undermine the confidence of Chinese companies investing in the US, the Ministry of Commerce said.China’s investment into North America tumbled at the end of last year below levels seen during the worst of the pandemic, a slide likely due to prospective investors waiting to see if Trump would win election in November.
Underscoring the divide between the two economic powers, last week Chinese Vice Premier He Lifeng expressed “serious concern” over a 10% tariff hike that Trump earlier place on goods from the Asian country. He made the comments in a call with Treasury Secretary Scott Bessent, who raised a host of issues with China, including “economic imbalances.”
China’s $295 billion trade surplus with the US looms large in the new administration’s list of worries, though Trump has said it may be possible to reach a fresh deal with Beijing, following one during his first term. “It’s possible, it’s possible,” he said last week.
The Bessent-He call came weeks after the new tariffs took effect, hitting the entirety of Chinese goods shipped to the US. Trump linked them to complaints over Chinese production of precursors for illicit fentanyl heading to America.
The rising China-US tensions come as Trump pushes to end the war in Ukraine, a move that started with landmark discussions between Trump and Russian leader Vladimir Putin. While China would welcome an end to the war because it would help improve its ties with Europe, it raises the possibility that once the fighting ends Washington would turn its full attention to Beijing.
Recent comments from people around Trump, including Pentagon chief Pete Hegseth and his eldest son Donald Trump Jr., indicate the US wants to focus the bulk of its military assets on countering China.