The Trump administration took aim at China with a series of moves involving investment, trade and other issues that raises the risk ties may soon worsen between the US and its top economic rival.

In recent days, President Donald Trump has rolled out a memorandum telling a key government committee to curb Chinese spending on tech, energy and other strategic American sectors. The administration also called on Mexican officials to place their own levies on Chinese imports – a move that comes after Chinese firms moved production to the US neighbor to get around duties the Republican enacted in his first term.

The US also proposed fees on the use of commercial ships made in China to counter the nation’s dominance in the production of the vessels. Chinese shipping stocks fell on Monday, while the benchmark CSI 300 Index fluctuated. The yuan traded onshore rose 0.2% to 7.2359 versus the dollar as of 12:30 p.m. in Shanghai. 

Taken together, the steps amount to the most sweeping, forceful actions targeting Beijing of Trump’s second term and could complicate a deal to reduce China’s trade surplus with the US that the president has indicated he wants to forge.

The memo with the order to the Committee on Foreign Investment in the US — a secretive panel that scrutinizes proposals by foreign entities to buy US companies or property – seems to be the most impactful of the flurry of the actions. Referring to Beijing as a “foreign adversary,” it says the changes are needed to protect “the crown jewels of United States technology, food supplies, farmland, minerals, natural resources, ports, and shipping terminals.”

“This is likely a disappointment for Beijing, which hoped to offer a large-scale investments in the US as a concession in a negotiation,” said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics in Washington. “This calls into question whether the US would be open to that kind of investment.”

To be sure, China’s investment into North America tumbled at the end of last year below levels seen during the worst of the pandemic, a slide likely due to prospective investors waiting to see if Trump would win election in November. Companies announced only $191 million of new investments into Canada, Mexico and the US last quarter, according to US-based consultancy Rhodium Group, a decline of more than 90% from the same period a year earlier. 

After the memorandum was released, Beijing urged Washington to stop politicizing and weaponizing economic and trade issues. The US government’s push to strengthen reviews of business ties on security grounds would seriously undermine the confidence of Chinese companies investing in the US, the Ministry of Commerce said.

The memorandum also says the US government should also review a 1984 tax deal with China that frees individuals and companies from double taxation, and an arrangement known as “variable interest entity” that Chinese firms use to list on American exchanges.

“Eliminating these kind of treaties just makes things very uncertain and complicated for investors because they don’t know if they’re going to be taxed,” Chorzempa said. 

A call in the memo for new and expanded limits on investment from US pension and endowment funds in high-tech sectors in China could affect companies along the Asian nation’s artificial intelligence supply chains, UBS Group AG said in a note. The rule could impact hardware, software and internet firms, strategists including James Wang wrote. 

The outline for a plan for fees on Chinese-built ships that carry traded goods also has mandates requiring that a portion of US products be moved on American vessels. It results from an inquiry into China’s practices in the maritime, logistics and shipbuilding industries that started during the Biden administration and ended with a report days before Trump took office.

China’s share of global shipbuilding capacity has surged over the past decade to account for around half of the world’s new builds, partly driven by its own domestic demand for more ships. The country’s fleet was valued at $255.2 billion in January, the most in the world, according to analytics platform VesselsValue. Japan was second at $231.4 billion, while the US ranked fourth at $116.4 billion.

Shares of Cosco Shipping Holdings Co., which was earlier blacklisted by the Defense Department over alleged links to the People’s Liberation Army, fell as much as 8.3% in Hong Kong on Monday. Singapore-listed Yangzijiang Shipbuilding Holdings Ltd. also slid.

Underscoring the divide between the two economic powers, last week Chinese Vice Premier He Lifeng expressed “serious concern” over a 10% tariff hike that Trump earlier place on goods from the Asian country. He made the comments in a call with Treasury Secretary Scott Bessent, who raised a host of issues with China, including “economic imbalances.”

China’s $295 billion trade surplus with the US looms large in the new administration’s list of worries, though Trump has said he may be able to reach a fresh deal with Beijing, following one during his first term. “It’s possible, it’s possible,” he said last week. Trump earlier threatened tariffs of 60% on Chinese goods — a level that would devastate trade between the nations — and has ordered his administration to investigate whether Beijing had complied with that agreement.

The Bessent-He call came weeks after the new tariffs took effect, hitting the entirety of Chinese goods shipped to the US. Trump linked them to complaints over Chinese production of precursors for illicit fentanyl heading to America.

The rising China-US tensions come as Trump pushes to end the war in Ukraine, a move that started with landmark discussions between Trump and Russian leader Vladimir Putin. While China would welcome an end to the war because it would help improve its ties with Europe, it raises the possibility that once the fighting ends Washington would turn its full attention to Beijing.

. Read more on World by NDTV Profit.In recent days, President Donald Trump has rolled out a memorandum telling a key government committee to curb Chinese spending on tech, energy and other strategic American sectors.  Read MoreWorld, Bloomberg 

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