Sanctions retaliation rules add to China’s deterrence

Significance

Crucially, they cover the China subsidiaries of multinational companies. They have taken effect immediately, but their application requires the identification of specific "unjustified" extraterritorial measures to trigger action. They add to the growing arsenal of trade-related instruments that Beijing can use for retaliation and attack in international disputes.

Impacts

• Though aimed at Washington, the new rules cover secondary sanctions, so they potentially affect European, Taiwanese and other Asian firms.
• The rules are particularly relevant to the semiconductor industry, which has been hit hard by US export bans affecting Huawei and SMIC.
• Some of the lack of clarity in the regulations will likely be addressed by subsequent rules covering their implementation.