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Outgoing Trump administration moves to block more business ties with China

On Behalf of | Nov 24, 2020 | Business Formation Planning

President Trump has been openly critical of China since before his election, and in the last four years, it has ranged from cold to openly hostile trade war. Now that the president and his staff come to terms with the fact that Joe Biden will take the oath of office on January 20, 2021, the administration is thinking about its US-China legacy.

One major push in the next few months will be to attempt a permanent confrontation where China is considered a threat instead of a business partner. The administration has taken several steps to openly antagonize the Asian power over the last four years, including the demand that TikTok would be banned unless an American company buys it.

While the TikTok issue seems tabled, the administration is considering further action with policies affecting business between the two countries. These include:

  • A warming of relations with Taiwan includes the sale of goods and weapons to an island country that does not recognize China’s sovereignty claim.
  • The administration directed the intelligence community to dig into China’s fishing practices.
  • It set new limits on imports of technology and other goods.
  • It will likely tighten visa restrictions for Chinese visitors, students and immigrants.

Future action likely

Over the final two months of the term, the goal is to place more restrictions on American companies selling products to certain Chinese companies and essentially blacklisting those with ties to the Chinese military, which follows up an executive order. If this order remains, Americans have until November 11, 2021, to fully divest funds or shares connected to those companies. Other companies may be targeted, particularly those involved in China’s crackdown in Hong Kong or restrictions on products from Xinjiang, where the government detained or surveilled local Muslim populations.

Trickle-down effect continues

Many of these actions will impact large companies doing business in China, but strained relations will lead to fewer avenues to conduct business. This ongoing trade war already affects smaller companies doing business in China, so it seems likely that these recent measures will as well. Those trying to set up or finish deals in China possibly may need to review the arrangements or rewrite their contracts to address these issues.