US and China enter new phase of legal arms race in trade war

The United States and China are intensifying a legal arms race with competing sanctions and regulations that trap global firms in conflicting compliance demands. This development comes amid US President Donald Trump’s visit to China and ongoing disruptions from the US-Iran war.

Washington and Beijing have rolled out rival legal and regulatory regimes in recent months. These measures aim to secure strategic advantages in trade, technology and security disputes.

Global companies from South Korea to the Netherlands now face an impossible position. They cannot meet one side’s rules without breaking the other’s, analysts said.

US authorities recently imposed sanctions on several Chinese entities over Iran trade links. This includes five oil refiners that Beijing had tried to protect the previous week. The actions add further strain to bilateral ties already pressured by energy supply disruptions.

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USTR official announcing investigations into South Korea and 59 countries over forced labor imports, with flags, map, and trade symbols.
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USTR launches investigations into South Korea, 59 others over forced labor imports

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The U.S. Trade Representative (USTR) has initiated Section 301 investigations into South Korea and 59 other economies for failing to adequately ban imports of goods produced with forced labor. This move comes as the Donald Trump administration seeks to introduce new tariffs to replace country-specific emergency tariffs struck down by the Supreme Court last month. South Korea's government plans to engage in close consultations with the U.S. to safeguard national interests.

China's Ministry of Commerce announced two trade barrier investigations into US practices on Friday, described as reciprocal countermeasures to Washington's two Section 301 probes against China. The probes target US measures disrupting global supply chains and green product trade, potentially breaching WTO rules and bilateral agreements. They are set to conclude within six months, with a possible three-month extension.

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A US court ruling on tariffs has lowered effective duties, easing tensions and steering the upcoming April summit between Xi Jinping and Donald Trump towards stability rather than escalation. Analysts say the decision strengthens China's negotiating position, with the summit expected to focus on extending a fragile truce rather than major concessions.

The anticipated meeting between the US and Chinese presidents will take place from May 13 to 15 in Beijing, though the encounter is marked by tensions surrounding the war between Iran and Washington.

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Amid energy shocks from the Iran war threatening Southeast Asia’s supply chains, US and European importers are shifting some orders back to China. Chinese exporters report a recovery in buyer numbers at the Canton Fair in Guangzhou.

Japan and other Asian trading partners are evaluating the fallout from U.S. President Donald Trump's new 15% global tariff, imposed under a different law hours after the Supreme Court invalidated his prior levies, as part of broader international reactions including Europe's coordinated response.

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Chinese social media is awash with criticisms of the US, ranging from sarcastic takes on Beijing’s official line to ‘armchair generals’ advising Tehran on fighting America. Platforms are tightly controlled, with most published comments heavily critical of the United States.

 

 

 

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