The Office of the United States Trade Representative (USTR) announced on October 28, 2025, the initiation of a Section 301 investigation into China's compliance with the Phase One Economic and Trade Agreement signed in January 2020. Directed by the President, this probe examines whether China's actions deny U.S. rights under the agreement or violate its provisions, potentially leading to new trade enforcement measures. The investigation stems from allegations that China has not met key commitments, including substantial purchases of U.S. goods and services totaling over $535 billion in 2020 and 2021, falling short by more than $217 billion according to official U.S. export data. It also covers structural issues in intellectual property, technology transfer, agriculture, and financial services. This development revives tensions from the U.S.-China trade disputes of the late 2010s, highlighting ongoing challenges in enforcing bilateral trade pacts and could result in escalated tariffs or other restrictions if non-compliance is confirmed. A public hearing is set for December 16, 2025, with comments due by December 1, 2025, to gather input on the extent of any burdens on U.S. commerce and appropriate responses.
Background on the Phase One Agreement and Prior Section 301 Actions
The Phase One Agreement, signed on January 15, 2020, between the United States and China, emerged from a series of trade disputes initiated under Section 301 of the Trade Act of 1974. This statute empowers the USTR to investigate and address foreign practices that burden U.S. commerce or deny benefits under trade agreements. The original investigation, launched on August 18, 2017, focused on China's policies related to technology transfer, intellectual property, and innovation, which were deemed unreasonable and discriminatory in a March 22, 2018, report by the USTR.
In response, President Trump directed a progression of tariff actions. These began with 25 percent duties on $34 billion of Chinese imports (List 1) effective July 6, 2018, followed by similar duties on $16 billion (List 2) in August 2018. Escalations continued with 10 percent duties on $200 billion (List 3) in September 2018, later raised to 25 percent, and plans for duties on another $300 billion (List 4), partially implemented at reduced rates. The Phase One Agreement, described in the Federal Register notice as 'a momentous step towards a more fair and reciprocal trade relationship with China and a key success of President Trump's first term,' required China to implement structural reforms and commit to purchasing specific amounts of U.S. agricultural, manufactured, energy, and service products.
These commitments aimed to address the persistent U.S. trade deficit with China and correct distortive practices. However, the notice highlights that five years later, China's apparent non-compliance has undermined competitive conditions for U.S. firms.
Key Elements of the Investigation
The current investigation, initiated on October 24, 2025, under Section 302(b) of the Trade Act, targets whether China's implementation—or lack thereof—denies U.S. rights or benefits under the Phase One Agreement. It focuses on two main areas: purchase commitments and structural reforms. On purchases, China agreed to buy more than $535 billion in U.S. goods and services over 2020 and 2021, but U.S. data indicates a shortfall exceeding $217 billion across most categories.
Structural commitments include protections against forced technology transfer, stronger intellectual property enforcement, removal of agricultural trade barriers, and opening financial services markets. The notice states that despite U.S. engagement, 'China appears not to have lived up to its commitments,' citing examples in these sectors. The USTR has consulted advisory committees and requested consultations with China under Section 303(a), setting the stage for determinations under Section 304.
If actionable conduct is found, Section 301(a) mandates appropriate actions, such as tariffs, fees on services, or import restrictions, subject to President Trump's direction. The investigation will assess burdens on U.S. commerce and potential remedies, inviting public input on these issues.
Public Participation and Procedural Details
To build a comprehensive record, the USTR is soliciting written comments and oral testimony. Comments must be submitted by December 1, 2025, via the online portal at https://comments.ustr.gov/s/, under docket USTR-2025-0007. Requests to appear at the December 16, 2025, hearing, which may be virtual or in-person, are due the same date under docket USTR-2025-0020, with testimony summaries required. Post-hearing rebuttals are accepted seven days after the hearing concludes.
The notice specifies topics for input, including evidence of non-implementation, estimates of economic burdens, and suggestions for actions like duty levels on Chinese products or restrictions on services. This process ensures stakeholder perspectives, from businesses to policymakers, inform the outcome, aligning with principles of transparency in trade enforcement.
Legal and Political Context
Section 301 investigations draw from precedents like the 2017-2018 probe, which led to tariffs upheld in court challenges, such as in the U.S. Court of International Trade's rulings affirming USTR authority. Politically, this action reflects bipartisan concerns over China's trade practices, though approaches differ—some advocate escalation for leverage, while others warn of supply chain disruptions and higher consumer costs.
Key players include USTR officials like Jennifer Thornton, General Counsel, and the inter-agency Section 301 Committee. The notice attributes prior tariff modifications and the Phase One Agreement to directions from President Trump, underscoring his administration's role in shaping U.S.-China trade policy. Broader forces include geopolitical tensions, supply chain resilience efforts post-COVID, and domestic pressures from industries affected by Chinese competition.
Implications and Perspectives
Short-term, the investigation could lead to new tariffs or restrictions, impacting U.S. importers and exporters. Long-term, it may influence bilateral relations, potentially encouraging compliance or escalating disputes into broader economic decoupling. Perspectives vary: U.S. industries like agriculture and tech may support enforcement for market access, while critics argue it risks retaliatory measures from China, harming global trade. International observers note parallels to WTO disputes, though Section 301 operates unilaterally.
In summary, this investigation underscores persistent challenges in U.S.-China trade enforcement. Potential next steps include USTR determinations by early 2026, followed by proposed actions and further public comment. Ongoing debates will center on balancing enforcement with economic stability, amid evolving global trade dynamics.