Research & Analysis

President Donald Trump’s Cabinet is aligned on a need for more tariffs, though the administration has yet to outline exactly when and how to do so, including determining which products and countries to target, as well as how high to set the duties. White House Press Secretary Karoline Leavitt indicated this week that Trump plans to levy tariffs on Mexico and Canada on February 1 and that he is still “considering” imposing a 10 percent tariff on all Chinese goods on the same day.

Since our last update, the United States and China have continued engaging in dialogue over IP protection to address business concerns, including the vice-ministerial meeting during the second Commercial Issue Working Group in Tianjin last September. Several critical issues impacting American rights holders—such as patent term extensions, regulatory data protection, and trade secret protection—were discussed during both high-level and technical exchanges.

President Donald Trump opted not to raise tariffs on China during the first week of his administration. Instead, he on Monday issued a regulatory freeze and directed executive department heads to review all new rules published under the Biden administration that have not taken effect, a move that could halt several rules with operational impacts for USCBC member companies.  The White House also issued a trade policy memorandum later that evening directing federal agencies, primarily the Department of Commerce, Treasury, and the Office of the US Trade Representative, to conduct a top-to-bottom review of US trade policy.

China’s economy experienced a moderate rebound in the final quarter of 2024, providing the needed push for the country to meet its annual growth target of around 5 percent. According to data released by the National Bureau of Statistics, China’s real GDP in 2024 reached RMB 134.9 trillion ($18.42 trillion), marking 5 percent year-on-year growth.

Republican control of the Senate, which will last until at least 2026, means that the legislative agenda on China will be guided by new committee chairs who have the power to shift the policies of their Democratic predecessors. While some policies may only be recalibrated, others are likely to do a full pivot.

The Department of Commerce’s Bureau of Industry and Security on Wednesday issued the Framework for Artificial Intelligence Diffusion interim final rule, geared towards curbing China’s access to cutting-edge chips used in AI. The new rule imposes country-specific export caps on chips needed to train AI models, proposing a three-tier licensing system that determines the type and quantity of advanced chips a country can procure based on its relationship with the United States.

During its final month in office, the Biden administration has released a slew of measures regulating commercial relations with China, capping off years of work in some areas and jumpstarting new types of rulemaking in others. Recent measures include precedent-setting export controls on the semiconductors needed to power artificial intelligence (AI) models, new blacklistings, and a Section 301 investigation.

Amid an economic downturn and growing pressure to restore foreign investor confidence, China’s Ministry of Finance (MOF) recently published a draft definition of “domestic products” for government procurement. The move aims to establish a nationwide standard. However, its effectiveness in resolving longstanding issues facing the business community in this area remains to be seen.

With Republicans maintaining control of the House of Representatives in the 119th Congress, which runs from now through December 2026, many of the same China policy priorities from last year are expected to stay front and center. Speaker of the House Mike Johnson (R-LA) is likely to task standing committee chairs with keeping the pressure on China-related proposals, though these will have to be balanced with other Republican priorities like immigration policy and tax cuts.

The Department of Defense (DOD) on Monday added prominent tech entities Tencent and Contemporary Amperex Technology Co., Limited (CATL), along with dozens of other Chinese companies, to its 1260H list of Chinese military companies. According to a department readout, these entities were added because of their involvement in China’s military-civil fusion strategy.