China hits back – what do Beijing’s countermeasures mean for U.S. businesses

Extend countermeasures to countries making deals with the U.S. For countries that strike trade deals with the U.S. at “Beijing’s expense,” China has threatened to take additional countermeasures against them directly

• • Why this matters -> With this latest announcement, global financial markets continue to react negatively, and countries will feel more pressure to “pick sides” and the +50 bilateral discussion that U.S. Trade Representative Jamieson Greer has mentioned will be of higher stakes

Antitrust Probe. A number of U.S. companies have been identified by China’s antitrust regulator, most notably Google and Nvidia. If found guilty, significant fines or other regulatory actions may result

• • • Why this matters -> With a growing number of U.S. businesses reducing their operations China, citing challenging operational contexts, this new measure towards large U.S. businesses makes the Chinese market less attractive and may deter future investment

Export controls. China’s commerce ministry has grown its export control restrictions on 15 U.S. defense-related companies that currently restrict Chinese suppliers, and for some that engage with Taiwan

• • Why this matters -> Even if the recently banned companies don’t operate in China, many have supply chains reliant on China, which could cause operational disruptions

Critical minerals, rare earths. As a signal to high-tech companies, China has imposed restrictions on five types of critical minerals, special magnets, and seven rare earth minerals (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium)

• • Why this matters -> The U.S. has a material reliance on China for many raw materials and critical minerals. For rare earths, China accounts for 72% of all imports

U.S. import suspensions. Import qualifications for three U.S. soybean exporters have been suspended, alongside imports of U.S. forestry products

• • Why this matters -> About half of U.S. soybean exports are shipped to China, totaling nearly $12.8 billion in trade in 2024. China is one of the world’s largest importers of wood products and third largest destination for U.S. lumber

Unreliable entity list. China’s Commerce Ministry has announced that ten additional U.S. companies have been added to the unreliable entity list; this means these firms are prohibited from exporting or importing in China or from making new investments in the country

• • Why this matters -> U.S. companies operating in China may feel greater pressure to demonstrate more caution in their evaluation of suppliers, product strategy, and external communications. For those in defense or defense-related, additional restrictions may be imposed

TikTok. Beijing has walked back its earlier approval for a U.S.-majority-owned TikTok deal until tariff and trade disputes are resolved

• • Why this matters -> Less so for large U.S. multinationals, instead this is a symbolic battle rather than something that will be operationally material

WTO complaints. China filed formal complaints with the World Trade Organization (WTO) regarding the legality of U.S. tariff policy and has called it “typical unilateral bullying.” China claims that U.S. measures are inconsistent with the U.S.’s obligations under provisions under the General Agreement on Tariffs and Trade (GATT) 1994

• • Why this matters -> The WTO has been discredited over the years for its failure to enforce previous GATT violations. Even if deemed “illegal” after consultation, the Trump administration may not face penalties or blockers in implementing its current trade agenda (which violates trade rules and norms)

Anti-circumvention investigation. China has made history by launching an investigation into the circumvention of the anti-dumping duty order on U.S. fiber-optical products. This type of investigation is widely used by WTO members to ensure the effectiveness of trade remedy measures

• • Why this matters -> China is looking to leverage existing mechanisms to demonstrate to broader trade partners that it is operating in good faith and can be a trusted partner. Especially in the scenario of ASEAN countries having to “pick sides,” the Chinese Ministry of Commerce is eager to demonstrate that it respects WTO authority

Will more Chinese countermeasures come?

At this point, the uncertainty around where the escalating trade war will end remains as high as ever. Although certain scenarios may be pointing to the end-game for the Trump administration, there may be other measures taken by China. Given that the U.S. has a large dependence on China for critical minerals, many anticipate this dimension to be most potentially damaging to the U.S. economy and one that China can continue to leverage to exert its influence.