The United States is preparing to open a formal inquiry into whether China failed to uphold its obligations under the 2020 “Phase One” trade agreement, marking a renewed effort by Washington to enforce trade commitments and protect American economic interests. The move reflects growing concern that Beijing has not delivered on key promises related to U.S. exports and market reforms.
Background: The 2020 “Phase One” Trade Deal
In January 2020, the U.S. and China entered into what is commonly known as the “Phase One” agreement. Under that deal:
- China committed to purchasing an additional US $200 billion of U.S. goods and services over two years beyond its then-expected baseline.
- Beijing also pledged structural reforms in key areas such as market access, intellectual property protection, and weaker trade-distorting practices.
- The agreement was part of a broader truce in a tariff war that began in 2018 and was intended to stabilize U.S.–China trade relations.
Why the Investigation Now?
According to reporting, the U.S. government—through the Office of the United States Trade Representative (USTR) under the statutory framework of Section 301 of the Trade Act of 1974—is preparing to launch a probe into China’s adherence to its commitments. Key motivations include:
- Evidence that China did not meet its purchase targets under the deal, especially in U.S. agricultural goods and other export categories.
- Frustration in Washington that reforms promised in the deal have either not been implemented or are being implemented slowly or partially.
- A strategic moment: the investigation is expected to be announced imminently—possibly as early as Friday—and comes ahead of a planned meeting between U.S. and Chinese leaders, which the U.S. wants to approach with leverage.
What the Investigation Could Produce
The investigation does not automatically impose new tariffs or penalties, but it opens the door to them. Here are the possible outcomes:
- The Section 301 mechanism allows the U.S. to determine whether the foreign country’s conduct is “unjustified, unreasonable, or discriminatory” and to impose remedial actions.
- If the investigation finds that China failed to fulfil its commitments, the U.S. could impose additional tariffs on Chinese goods, or impose other trade restrictions.
- It will involve a period of public comment, data gathering, and stakeholder input from U.S. industries and labour groups as part of the process.
The U.S. decision to formally investigate China’s compliance with the 2020 Phase One trade deal is a clear statement: Washington appears unwilling to allow past trade commitments to slide without scrutiny. While the outcome remains uncertain, the direction is unmistakable—greater enforcement, greater accountability, and higher stakes in U.S.–China trade relations.
