NextFin news, on October 24, 2025, the Office of the United States Trade Representative (USTR) announced the launch of a Section 301 trade investigation into China's compliance with the Phase One trade agreement signed on January 15, 2020. This agreement, brokered during Donald Trump's first term as US President, was intended to ease the tariff war by binding China to increase purchases of American goods and services over the subsequent two years and improve market access for US companies. The investigation was initiated in Washington and comes mere days before President Donald Trump is scheduled to meet Chinese President Xi Jinping in South Korea for a crucial Asia-Pacific summit. USTR Trade Representative Jamieson Greer emphasized that the probe responds to Beijing’s "apparent failure to comply" with its commitments.
This decision follows growing concerns among US policymakers that China's promised expansions in agricultural imports—including soybeans and other key farm products—have not materialized as stipulated, compounded by China's recent tariff hikes on US agricultural goods. The investigation formalizes USTR's intent to assess whether China's actions have undermined competitive conditions for US exporters and businesses operating in China. It also opens the pathway for possible enforcement measures, including new tariffs or trade remedies, under US trade law.
The timing and context of the probe are particularly significant. Since Trump's return to the presidency in January 2025, US-China trade relations have been marked by tit-for-tat tariff impositions and increased trade frictions. Though previous trade negotiations and the Phase One deal had signaled a temporary truce, the current administration's hardline stance and the probe’s announcement highlight renewed protectionist pressures. The investigation ahead of the Trump-Xi summit suggests that trade will be a central, contentious agenda item, with the US leveraging enforcement mechanisms to extract concessions from China.
From an economic analysis perspective, the Phase One agreement was ambitious but flawed from the start given the outbreak of the COVID-19 pandemic, which disrupted demand and supply chains globally and severely impacted China's ability to meet purchase targets. However, the US government’s claim references continued policy actions by China inconsistent with the agreement, such as tariff escalations on US agricultural products and restrictions limiting US companies’ market participation.
According to official US trade data and agricultural export figures, Chinese imports of US soybeans, a flagship product under the agreement, fell significantly in 2023 and 2024 compared to pre-agreement levels, while Chinese tariffs on these goods fluctuated upwards amid broader geopolitical tensions. This has concrete economic impacts: US farmers, who were key supporters of Trump’s trade policies, face revenue losses and increased uncertainty. Moreover, disruptions to bilateral trade harm supply chain reliability for US industries relying on Chinese inputs, potentially inflating costs domestically.
The strategic calculus of the US administration is also geopolitical. By enforcing compliance rigorously, the Trump administration seeks to demonstrate resolve in protecting US economic interests and industry stakeholders amid increasing global competition, especially in high-tech and critical raw materials sectors. China's export controls on strategic minerals and its assertive trade posture contribute to a complex trade environment where regulatory and tariff barriers serve as tools of broader economic statecraft.
Looking forward, this investigation could trigger several outcomes. If China is found non-compliant, the US may impose additional tariffs or tighten existing ones, intensifying the bilateral trade war. This would risk retaliation from Beijing, potentially involving sanctions or non-tariff barriers affecting multiple sectors. Alternatively, the probe could catalyze diplomatic negotiations, with China making concessions to avert escalation. The upcoming Trump-Xi meeting is pivotal; success could stabilize trade relations, while failure risks a prolonged period of economic uncertainty and market volatility.
International markets and global supply chains remain sensitive to trade policy shifts between these two economic superpowers. The investigation signals a broader trend of heightened trade protectionism and regulatory scrutiny under President Trump’s current administration. Businesses engaged in US-China trade must prepare for a more complex compliance landscape and fluctuating tariff environments. Meanwhile, policymakers worldwide watch closely, as deterioration in US-China trade can ripple across global economic growth and geopolitical stability.
In conclusion, the US launch of a trade investigation into China's compliance with the 2020 Phase One deal underscores the fragility of the trade détente and reflects deeper geopolitical rivalry. It spotlights the challenges of enforcing international trade agreements in an era of complex economic interdependence and nationalistic economic policies. The outcome will significantly affect bilateral trade volumes, supply chain dynamics, and the broader strategic relationship between the world's two largest economies in 2025 and beyond.
According to News.az, the USTR is expected to solicit public comments in the coming weeks and may conclude its investigation by early 2026, setting the stage for consequential trade decisions by the Trump administration.
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