IMPACT OF US-CHINA TRADE CONTROLS ON COMPLIANCE PROGRAMMES
R&C: How would you characterise recent trade relations between the US and China? What are the key factors driving the trade policies of the two countries, and what economic and political risks do they raise for companies?
Tzinova: The relationship between the US and China has been tense for years, starting in the early weeks of the Trump administration and continuing to date. While there has been an effort to restore some of the trust, a few key issues persist. These include semiconductors and their use in military technologies, rare earths that form part of every electronics device and are predominantly supplied by China, and the singular position of Taiwan in microchip manufacturing. With China’s ambitions in the South China Sea, the US and its allies have reason to be concerned about an eventual break in the supply of both rare earths and microchips, which will affect every industry from car and phone making to sensitive military technologies. This has prompted the new movement of reshoring and nearshoring, trying to build capacity closer to home – literally and in terms of shared values with trade partners.
Kadel: Before thinking about where we are today, it is important to understand that the history of trade between the US and China is a relatively newer story. Following the establishment of the People’s Republic of China in 1949, there was virtually no trade between the two countries. Not until 1979, when the US and China normalised relations, did trade between the two nations start. Over the next four decades or so, trade expanded from a few billion dollars to hundreds of billions of dollars annually. In 2022, US imports from China were at $564bn, and US exports to China were at almost $200bn.
Apr-Jun 2024 Issue
Holland & Knight LLP
Sullivan & Cromwell LLP