Throughout the year, Trump has consistently voiced concerns about perceived trade injustices against the United States on a global scale. He frequently clashed with multiple nations and subsequently engaged in negotiations. However, the tension with China has been the most significant, as it could lead to far-reaching consequences. As tensions heightened on the 10th of this month, the United States and China are preparing for reciprocal retaliations on November 1st. It has been recently announced that action will be taken under the umbrella of Section 301.
Section 301 and Its Implications
Section 301 is a legislative measure enacted by the U.S. Congress that allows the U.S. to initiate actions against another country’s unfair trade practices. Through this law, the U.S. can launch investigations and take countermeasures if necessary. The Office of the United States Trade Representative (USTR) is the body responsible for enforcing this regulation.
According to sources in The New York Times, an investigation concerning China’s compliance with the 2020 trade agreement is imminent. Trump and Xi are set to meet within two weeks, and the initiation of this investigation beforehand is likely to intensify the situation. However, cryptocurrency markets seem indifferent to these developments for now.
Strategic Moves Ahead of Crucial Meeting
The investigation into China’s failure to adhere to the agreement terms provides Trump with substantial leverage before their meeting. As a counter to China’s export controls, the U.S. announced new export controls, tariffs set to start on November 1st, and the launch of a Section 301 investigation. The agenda for bargaining during the meeting is, therefore, expanding.
The pivotal date is October 30th, with Trump and Xi scheduled to meet in South Korea, barring any cancellations. If they reach an agreement, it would be beneficial; otherwise, within 48 hours, on November 1st, a new round of trade retaliations will commence.
The 2020 agreement required China to purchase an additional $200 billion worth of U.S. goods or services. Did China comply? No.