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US/China trade tensions: a tipping point?

The use of sanctions and counter-sanctions in the US/China trade conflict intensified significantly in early 2021. The measures, and the scrutiny of related commercial operations, have impacted a large number of companies in multiple sectors, as well as international supply chains. Does the intensity of these recent development signal, absent a rapprochement, a tipping point in trade relations and its impact on business? Are companies prepared for the legal, regulatory and reputational issues that may arise from even indirect exposure to competing trade measures?

The issues of Hong Kong, Xinjiang, and technology remain at the center of the, predominantly, US trade measures. Of particular note, in March 2021 alone:

  • The EU and UK have imposed sanctions on China for the first time since 1989;
  • The United States has continued, under the Biden presidency, the Trump era approach to imposing trade restrictions on China across all three of these central issues; and
  • China has adopted wide-ranging counter-sanctions (including on business) and stands poised to implement the legal toolkit that it has been expanding in the past 6 months (including the Unreliable Entity List, the Blocking Rules and the Export Control Law).

While China’s response to US and other Western trade measures has been muted to date, recent events signal a potential escalation.

This briefing puts the recent measures in the context of the tensions since 2018. The attached timeline here tracks the key sanctions, export control, and trade events, as well as the adoption of enabling legislation by both the United States and China. Even without mapping the general and targeted measures and counter-measures adopted related to tariffs, dumping, and intellectual property, the timeline shows the increasing intensity of measures relating to the three central issues identified above, and the increasingly wide-ranging impact on businesses and supply chains.

The direction of travel is clear, and companies should be cognisant of the emerging strategic and practical challenges posted by US/China trade tensions.

To discuss how your business can navigate the increasingly complex landscape, please contact your usual Freshfields contact or any of the contacts below.

US China trade tensions a tipping point
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