USTR Launches New Section 301 Investigation on China’s Compliance with the Phase One Agreement
The United States has reopened one of its most consequential trade questions of the past decade: Has China kept its promises?
On Oct. 24, the U.S. Trade Representative (USTR) initiated a new investigation under Section 301 of the Trade Act of 1974 to determine whether China has honored its obligations under the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China – better known as the Phase One Agreement.
Businesses across sectors, from agriculture (e.g., soybeans, meat, cotton, and other crops) and manufacturing (e.g. automobiles and parts, aircraft, industrial machinery, medical devices) to energy (e.g. liquified natural gas, crude oil, coal, petroleum, ethanol), may wish to participate in the Section 301 comment process. Industries that depend on exports to China or rely on Chinese inputs, components, or investment partnerships have a particular stake in how this investigation shapes the next phase of U.S. – China trade relations.
The inquiry will assess whether China has lived up to its commitments on purchases, market access, intellectual property protections, and currency practices, and whether its actions continue to burden or restrict U.S. commerce.
The USTR is requesting public input. Starting October 31, 2025 dockets will open for the submission of written comments and requests to appear at the investigation hearing. Interested parties will have until December 1, 2025 to submit written comments, requests to appear at the hearing, and summaries of proposed testimony.
The Section 301 Committee will then convene for a public hearing on December 16, 2026.
A Look Back: From Tariffs to Truce
In 2018, the United States invoked Section 301 to counter what it viewed as unreasonable and discriminatory Chinese trade practices involving technology transfer, intellectual property, and innovation. That investigation led to punitive tariffs on hundreds of billions of dollars in Chinese imports, and predictable retaliation from Beijing.
Those tariffs were challenged by over 3000 importers in the Court of International Trade (CIT), which initially upheld most of the USTR’s actions. The Federal Circuit later affirmed that Section 301 empowers the USTR to address unfair trade practices and Section 307 allows it to modify prior tariff actions. Plaintiffs are now considering whether to petition the Supreme Court for review, extending the legal battle that began with the first wave of tariffs.
After two years of tariff escalation, the Phase One Agreement, signed by President Trump during his first term in January 2020, was meant to mark a reset. China pledged to purchase an additional $200 billion in U.S. goods and services over two years, while tightening its laws on IP protection, agriculture, and technology.
Now, five years later, Washington wants to know if those promises have been kept or quietly abandoned.
What This Means for U.S. Companies
The USTR is seeking public input.
- Comment period opens: October 31, 2025
- Deadline for written comments and requests to testify: December 1, 2025
- Public hearing: December 16, 2025
Businesses with supply chains, joint ventures, or sales exposure in China should pay close attention. This process could again redefine the trade architecture between the world’s two largest economies.
Depending on the findings, the USTR could recommend a renewed round of tariffs or other trade measures, as it did in 2018. The CIT and Federal Circuit rulings have reaffirmed the USTR’s broad authority under Sections 301 and 307 to investigate, modify, and expand such actions. That means the administration has both the legal tools and political latitude to act decisively if it concludes that Beijing has failed to comply.
The Bigger Picture
This investigation is not simply about the enforcement of bilateral agreements. It signals a broader shift in Washington’s approach, from managing tariff conflicts to ensuring that prior trade commitments are meaningfully observed.
While few in Washington expect a finding of full compliance, what remains uncertain is how the administration will respond. A new round of tariffs? Expanded controls? Or a recalibration of the U.S. – China trade framework itself?
For American manufacturers, importers, and investors, the outcome could determine the shape of bilateral trade for years to come.
Contact Clark Hill
If you have questions regarding the content of this alert, please reach out to any of the contacts below or another member of Clark Hill’s International Trade Business Unit.
- Mark Ludwikowski (mludwikowski@clarkhill.com; 202-640-6680)
- Kevin Williams (kwilliams@clarkhill.com; 312-985-5907)
- Aristeo Lopez (alopez@clarkhill.com; 202-552-2366)
- Kelsey Christensen (kchristensen@clarkhill.com; 202-640-6670)
- Laura M. Quesada (Lquesada@clarkhill.com; 202-240-0170)
This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual author only and are not necessarily the views of Clark Hill PLC. Although we attempt to ensure that postings on our website are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.