CHINA: An Introduction to International Trade/WTO: Respondent (PRC Firms)

Current Economic Conditions Pertaining to International Trade

From 2024 until now, the most noteworthy risk casting a shadow on international trade is the trend of the escalating global trade war. Nations across the globe witnessed the damaging effects of the trade war initiated by the first Trump administration in 2017, which, along with the COVID-19 pandemic and global geopolitical crises (such as the Russia–Ukraine conflict), materially obstructed the development of the global economy and trade. However, these economic and trade tensions have not only persisted and intensified in 2024 but are expected to escalate further in 2025.

Controversial action taken by the United States in global maritime and logistics sectors

The first and foremost controversy to occur in 2024 was the Section 301 investigation unilaterally instigated by the United States on the People’s Republic of China (hereafter also referred to as “China”) for its maritime, logistics and shipbuilding sectors, alleging that China has been carrying out unfair policies in order to dominate the aforementioned sectors. Compared with other trade investigations and measures on general trade of goods, this particular Section 301 investigation is controversial because of its apparent unilateralism and prejudice (for example, disregarding the fact that recession within the shipbuilding and maritime industries in the United States arguably happened long before the development of Chinese peer industries). Its controversial proposed action of charging huge cumulative “port fees” to Chinese shippers, as well as any shippers whose fleet is comprised of Chinese-built vessels and/or any shippers with prospective orders for Chinese vessels, would arguably further frustrate and threaten global trade.

The Trump administration has taken over the power of proposing action and investigating said action, causing pessimism among global trade practitioners concerning whether such investigation can be concluded in a reasonable and prudent manner. Ocean shipping being the critical infrastructure and channel for global trading of goods, unreasonable fees charged following a questionable investigation outcome would have a tremendous negative effect on global trade, of concern to all.

Other unilateral restrictive trade action taken by the United States

The Section 301 investigation on China’s maritime, logistics and shipbuilding sectors is not the only controversial unilateral action taken by the United States since 2024. The Biden administration initiated two additional Section 301 investigations, including one on China’s acts, policies and practices targeting dominance of the semi-conductor industry. The Biden administration exacerbated the effect of the large-scale tariff imposed by the first Trump administration under the Section 301 measure on China’s technology transfer, intellectual property and innovation, by modifying the previous tariff with additional products becoming dutiable. It is highly questionable whether the unilateral measure pertaining to the Section 301 investigation is consistent with WTO rules. From the perspective of the Chinese government and other WTO members, by reviving Section 301 as a signal of unilateralism, the Biden administration aroused suspicion that the backlash on global trade has become a bipartisan consensus.

Since President Trump’s second administration commenced in January 2025, additional trade restrictions have been initiated under Trump’s guiding ideologies of “America first” and “reciprocal trade”, including:

1. additional tariffs, as well as the threat of elimination of the de minimis exemption, on imports from China (including Hong Kong), Canada and Mexico on grounds of national emergency;
2. modification of the pre-existing Section 232 tariff on certain steel/aluminum products and derivatives, by raising the tariff rates from 10% to 25% for aluminium, as well as adding additional steel and aluminum derivatives to the list of tariffs;
3. initiation of new Section 232 investigations on imports of copper and on imports of timber and lumber (recalling the Section 232 investigations on steel and aluminum, these new investigations are likely to result in additional tariffs to the respective products once the investigations end with a positive determination); and
4. initiation of a general plan of “reciprocal tariffs” on all trade partners with the United States globally, targeting a series of national practices which the United States unilaterally believe to be “non-reciprocal”.

Although Trump has just started his second term of presidency, an abundance of restrictive trade measures from his administration are being encountered worldwide. It is arguable that global trade will face far more challenges in the future under the impact of US action as a major trading nation.

Other significant restrictive trade action from the Western world

The above-mentioned events in the United States are not the end of the story. As the leader of the Western world, the unilateral action taken by the United States has triggered copycat practices. For example, in October 2024 Canada initiated additional tariffs on electric vehicles as well as steel and aluminum products from China, together with other restrictive trade measures. Likewise, the European Union also concluded its anti-subsidy investigation against electric vehicles from China, resulting in significant countervailing duties. The overlap in products affected by these measures with those targeted by the United States makes it difficult not to assume that these actions are influenced by the United States.

Levels of Remedial Trade Measures and Legislation That Will Affect Clients

Shifting the perspective to global trade remedies, the developing trend is also of concern. Specifically, according to public statistics from the China Trade Remedies Information website, 357 anti-dumping investigations were initiated worldwide in 2024, nearly doubling from 189 investigations in 2023; and 62 countervailing duty investigations were initiated worldwide in 2024, more than double the 26 investigations in 2023. These substantial increases in both the anti-dumping and countervailing duties investigations also reflect heightened trade tensions.

The most important new legislation in 2024 was undoubtedly the modification of remedial trade regulations to enhance the administration of the anti-dumping duty and countervailing duty laws by the Department of Commerce of the United States. The most challenging modification affects the separate rate application response deadlines for non-market economy nations (including the People’s Republic of China) in anti-dumping investigations: reduction of the time period from 30 days generally (in the past) to 21 days (for initial investigation) or 14 days (for administrative reviews). Moreover, in practice, the modification led the Department of Commerce to become less likely to grant an extension and more likely to grant a shorter time period for an extension. The legislative and practical tightening of the deadline for the separate rate application will unquestionably increase the difficulty for Chinese enterprises to respond.

Additional modifications by the Department of Commerce include having stricter standards of review on granting separate rate enterprises located in another market-economy third country controlled by a Chinese enterprise, as well as on enterprises located in China and controlled by shareholders located in a market-economy third country. The overall effect of the modification is to make it more difficult for Chinese enterprises to achieve a separate anti-dumping rate.

Potential Hurdles or Difficulties Faced by Clients

According to the discussion above, Chinese clients will undoubtedly encounter difficulties when their business participates in global trade. Clearly, initiations of trade remedies and unilateral restrictive trade measures have been rising since 2024. For Chinese enterprises in particular, the increase in trade remedy investigations and enhanced duties of response will be risky and burdensome to their business. In addition, unilateral restrictive trade measures affecting certain industrial sectors as a whole, or broadly affecting sectors via increased shipping and logistics costs, will have severe impacts upon all trade practitioners coupled with increased difficulty to respond.