Why It Matters

A Congressional Research Service report updated last week offers Congress a pointed assessment of the Section 301 China trade deal, and the picture it paints is one of incomplete commitments, structural problems left untouched, and a set of trade tools that may not be equal to the challenge they were designed to meet.

The U.S.-China Phase One trade agreement, signed in January 2020, was supposed to be the opening move in a longer effort to force China to change the industrial and technology practices that American businesses and officials had spent years complaining about. It was never meant to be the final word.

Five years later, there is no Phase Two. China fulfilled roughly 60 percent of its goods purchasing commitments under the deal, according to the report, and the structural issues at the core of the original dispute (state subsidies, forced technology transfer, and intellectual property theft) were largely deferred to future talks that never happened. In October 2025, the U.S. Trade Representative initiated a new investigation into China's implementation of the Phase One deal, a signal that the administration itself views the agreement as having fallen short.

The central tension the report surfaces is straightforward: the United States has spent nearly a decade deploying tariffs and trade pressure against China's industrial policies, and those policies remain largely intact.

The Big Picture

How the Section 301 China Trade Deal Came Together

The roots of the dispute go back to August 2017, when the USTR invoked Section 301 of the Trade Act of 1974 to investigate Chinese industrial practices. That decision came after 15 years of efforts by the U.S. government and American industry to resolve concerns through other channels, including the World Trade Organization. The report notes that while the USTR had prevailed in several WTO dispute cases against China, experts assessed that most of the practices at issue were systemic enough that the WTO's case-by-case approach could not adequately address them.

The concerns were substantial. The USTR identified forced technology transfer, cyber-enabled theft of U.S. intellectual property and trade secrets, discriminatory licensing practices, and state-funded acquisitions of U.S. firms in strategic sectors like aerospace and semiconductors. Undergirding all of it was China's Made in China 2025 industrial policy, a government-directed effort to achieve global leadership in high-technology sectors.

U.S. officials concluded that waiting for traditional trade remedies like antidumping measures to kick in was not a viable strategy. By the time such measures took effect, they reasoned, China could already have secured a dominant global market position in sectors like electric vehicles and semiconductors.

In 2018, USTR imposed four rounds of Section 301 tariffs (ranging from 7.5 percent to 25 percent) on approximately $370 billion worth of U.S. imports from China. China retaliated with tariffs on $110 billion worth of U.S. goods. Most of those tariffs remain in effect today.

Phase One

The Phase One agreement, signed on January 15, 2020, included Chinese commitments on intellectual property, technology transfer, foreign investment, currency practices, and a two-year purchasing deal. On the structural side, China agreed to prohibit forced technology transfer and to bar government support for outbound investment targeting foreign technology prioritized in Chinese industrial plans.

On the purchasing side, China committed to buy at least $200 billion in U.S. goods above a 2017 baseline during 2020 and 2021, spread across agriculture, energy, manufactured goods, and services.

China met approximately 60 percent of its goods commitments, and about 57 percent when services are included. The report attributes the shortfall to several factors: China's deliberate diversification of agricultural and energy suppliers, the disruptions of the COVID-19 pandemic, and Chinese efforts to reclaim shipping containers from U.S. ports before they could be reloaded by American exporters.

The report also flags a more pointed concern: that the focus on a purchasing deal and market access commitments in agriculture and financial services may have allowed China to avoid addressing the core Section 301 issues around industrial and technology practices. Some experts assessed that Chinese negotiators pushed the harder structural questions (state subsidies, technology transfer requirements, IP theft) into future talks that never materialized.

Section 301

The tariff landscape has continued to evolve. In May 2024, the USTR extended most of the 2018 tariffs and raised additional tariffs by 25 percent to 100 percent on a range of goods, including electric vehicles and batteries, semiconductors, solar cells, steel, aluminum, medical products, and ship-to-shore cranes.

More recently, in December 2025, USTR determined that Chinese practices related to mature-node chips and silicon carbide substrates were actionable under Section 301 but proposed an initial tariff rate of zero percent, deferring any real action until June 2027. In January 2025, USTR also determined Chinese practices in maritime and shipbuilding to be actionable and proposed port equipment tariffs and fees for ships built in China. China retaliated. By November 2025, both sides had agreed to halt those actions for one year.

The report also notes that USTR proposed but never enacted Section 301 tariffs on consumer electronics from China, and that President Trump exempted many of those products in his 2025 reciprocal tariff actions.

Political Stakes

For the Administration

The report puts the Trump administration in an awkward position on several fronts. On one hand, the administration has leaned hard into tariffs as its primary tool for pressuring China, and the CRS findings support the argument that China's structural practices remain a legitimate concern. On the other hand, the pattern of delayed actions (on semiconductors, on shipbuilding, on consumer electronics) raises questions about whether the tariff strategy is being applied consistently or selectively.

The administration also faces a fundamental tension that the report makes explicit: some members of Congress want tariffs reduced to provide relief for American consumers and businesses, while others argue they should be sustained or raised to keep pressure on China. The administration has to navigate that divide while simultaneously managing a trade relationship that touches nearly every sector of the U.S. economy.

For Congress

The report lays out a series of questions Congress will need to grapple with as it assesses the administration's approach. Given that Phase One secured limited commitments, what should Congress expect or require from any future negotiations with China? If USTR determines that China has failed to implement provisions of the deal related to China's intellectual property and Section 301 obligations, what actions should follow?

The report also raises a broader strategic question: Does a focus on bilateral talks with China draw U.S. attention and resources away from efforts to work with allied countries on joint responses to Chinese trade practices?

There is also the question of whether Section 301 is the right tool at all for addressing some of the most pressing concerns, including Chinese practices in semiconductors and shipbuilding, or whether Congress should consider creating new authorities better suited to the challenge.

For the Public

American agricultural exporters, energy producers, and manufacturers were counting on the market access the deal was supposed to deliver. The report's data showing China met only about 60 percent of its goods commitments reflects purchases that did not happen and economic activity that did not materialize.

At the same time, the tariffs that remain in effect are paid by U.S. importers, with costs often passed along to consumers. The debate over whether to sustain, raise, or reduce those tariffs has direct implications for prices on a wide range of goods.

The Bottom Line

The CRS report makes clear that the U.S.-China Phase One trade agreement resolved far less than its architects had hoped. China did not meet its purchasing commitments, and the structural practices that drove the original Section 301 investigation (forced technology transfer, IP theft, state subsidies) were largely left for future talks that never came.

Access the Legis1 platform for comprehensive political news, data, and insights.