U.S. Targets PRC Interests in Maritime, Logistics, Shipbuilding, Commodities, and Aviation

  • Legal Development 01 May 2024 01 May 2024
  • Asia Pacific, North America

  • Regulatory & Investigations - Regulatory Risk

The United States has expanded its targeting of PRC interests from technology and data rich industries to other industries, as evidenced by recent actions involving maritime, logistics, shipbuilding, commodities, and aviation.


Since 2017, the United States has enacted a series of measures and tools targeted at the PRC technology sector and data rich industries. These include expanding the powers of the Committee on Foreign Investment in the United States (CFIUS) through the Foreign Investment Risk Review Modernization Act of 2018 and its subsequent robust implementation, the Export Control and Reform Act of 2018 and its subsequent robust implementation including through additions to the “entity list” and enhanced export controls on advanced semiconductors and semiconductor equipment, investment sanctions schemes such as the “Chinese Military-Industrial Complex Companies” list and the Holding Foreign Companies Accountable Act, and recent ad hoc regulation pertaining to cross-border data transfers, connected vehicles, and divestment legislation for Tiktok. 

A recent phenomenon has emerged where the United States has started to target industries besides the technology sector and data rich industries.

Section 301 Investigation of Maritime, Logistics, and Shipbuilding

On 17 April 2024, the United States Trade Representative office (USTR) announced an investigation under Section 301 of the Trade Act of 1974 (known commonly as a “Section 301 Investigation”) pursuant to a request made by five trade unions. In a formal notice issued by the USTR for a hearing on 29 May 2024, the USTR acknowledged the complaint made by the five trade unions and requested public comments on allegedly unreasonable, discriminatory, unfair and inequitable, and/or state assistance acts of the Chinese PRC in the maritime, logistics, and shipbuilding industries.

In practice, the consequences of a Section 301 Investigation involve the imposition of tariffs. Section 301 Investigations have been used in the past to initiate USTR investigations into alleged distortive Chinese government practices and intellectual property issues, which led to the imposition of broad based tariffs on Chinese goods during the Trump presidency, which remain in place to date. While Section 301’s definitions for “unreasonable”, “discriminatory”, and “export targeting” (state intervention), are broadly defined, applied to this case there is a specific provision in the Trade Act involving the provision of “subsidies for the construction of vessels used in the commercial transportation by water of goods between foreign countries and the United States”.

Steel and Aluminium Tariffs; Aviation Restrictions

On 18 April 2024, President Biden issued a statement calling for the tariff rates on steel and aluminium to be raised from an average of 7.5% to 22.5%. He also directed his staff to work with Mexico to prevent tariff evasion by routing Chinese shipments through Mexico.

In a letter to U.S. Secretary of State Anthony Blinken and U.S. Transportation Secretary Pete Buttigieg on 11 April 2024, a group of aviation trade groups and unions requested a denial of further approvals of new inbound flights between the U.S. and China, on account of China’s alleged “anti-competitive” practices. Separately, on the same day, a U.S. House of Representatives Committee also sent a separate letter to U.S. Secretary of State Anthony Blinken and U.S. Transportation Secretary Pete Buttigieg urging “caution” on approving new inbound flights. The letter noted that PRC airlines were still flying over Russian airspace whereas U.S. airlines were not, thereby giving the PRC airlines a competitive advantage.

The fact that the two letters were sent around the same time may not be a coincidence. It highlights the expanding sectors subject to U.S.-China tensions, with implications that may affect third countries and international supply chains and investment flows in affected sectors.

For more information on how we can help you navigate US-China tensions, please contact Charles Wu at Charles.Wu@clydeco.com



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