USA's Newest Round of Trade Restrictions against China
Chinese President Xi Jinping shakes hands with U.S. Vice President Joe Biden (L) inside the Great Hall of the People in Beijing December 4, 2013. Photo: Lintao Zhang / Reuters
As tensions continue to heighten between the US and China, the US has unleashed its latest restrictions on Chinese technology. Unlike the previous round of restrictions, the latest focus on Chinese exports instead of imports.
After the US Department of Commerce deployed a new set of rules regarding semiconductor exports, there have been calls to restrict other aspects of trade with China. The USDC’s restrictions are aimed at China’s domestic capabilities, whereas the most recent round focuses on directly protecting American citizens. Highlighting the diverse mechanisms to regulate trade with China, the Federal Communications Commission has implemented the latest restrictions. Both sets of restrictions represent meaningful changes to the US-China relationship.
While the FCC has enforced rules about trade for various reasons in the past, the latest regulations represent the first time they have prohibited the authorization of new equipment based on national security concerns. Specifically, the Chinese tech imports were “deemed to pose an unacceptable risk to national security from being authorized for importation or sale in the U.S.,” according to an FCC press release. These restrictions outlaw exporting new products to the US but do not require abandoning existing Chinese products. Generally, the restrictions focus on products that are intended to be kept in people's homes, such as wifi routers, phones and cameras. While the last set of restrictions was an attempt to prevent China from developing more dangerous tech in the future, this round focuses on current Chinese capabilities.
Huawei Mate 20 Series launch event. Photo: Kārlis Dambrāns / Flickr
Although these restrictions are poised to affect several Chinese companies, Huawei and ZTE stand out as the most threatened. The FCC’s actions will likely eviscerate all sales from those companies to Americans. In addition, Dahua, Hikvision, and Hytera are unlikely to be able to distribute much of their tech within the US. This is not the first time that Huawei has fallen victim to geopolitics, as a series of Trump-era bans cut Huawei off from key suppliers such as Taiwan Semiconductor Manufacturing Company. These sanctions had led to a 41% decline in business for the tech giant's smartphone shipments, pushing the company from the #1 manufacturer of smartphones down to #6.
Moreover, these regulations culminate an effort that started under Trump, marking a point of congruency between the Trump and Biden administrations. The bipartisan support for increasingly more assertive policy towards China indicates the perceived threat by Americans. US actions indicate both a willingness to use its economic clout to cripple adversaries and an attempt to strike at the heart of Chinese technological advancements. More broadly, new US protectionism presents a potential issue for the future of global trade because geopolitical aims may start to take precedence over economic growth.
So far, China has yet to retaliate with restrictions of its own. However, the most recent set of restrictions is unlikely to be the last major exchange between the two great powers in the coming years.