Bolstered by strong bipartisan support, the Biden administration is pulling out all the stops to reduce America's dependency on China.

Although various American executives have recently met with President Xi Jinping as part of the China Development Forum, the US government remains cautious when it comes to Chinese trade. From maintaining Trump's tariffs to passing the so-called CHIPS and Science Act, read on to discover the steps the US is taking to distance itself economically from its largest trading partner.

Donald Trump got the ball rolling in May 2018 when his administration imposed sweeping tariffs on Chinese imports.

According to the White House's online archives, these measures were introduced to counter "unfair trade practices – including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies – that champion Chinese firms and make it impossible for many US firms to compete on a level playing field."

The tariffs have plenty of downsides and have sparked a bitter trade war that's hurt jobs, wages, and production on both sides.

However, these levies have turned out to be effective decoupling tools and have encouraged trade with other countries. They've also led to movements in US manufacturing, which we'll discuss in more detail shortly.

Much like his predecessor, President Biden is strongly committed to reducing America's reliance on Chinese products and supply chains.

Since taking office in 2021, Biden has wasted no time in reversing some of Trump's policies. But given his wariness of Beijing and desire to pull away from China to safeguard America's national security and economic interests, it comes as no surprise that the current POTUS has chosen to maintain the Trump-era tariffs.

In fact, the Biden administration has retained tariffs averaging 19.3% on two-thirds (or $335 billion-worth) of goods sourced from the People's Republic.

With inflation skyrocketing, the president has been mulling over whether to scale back the tariffs in a bid to lower consumer prices but may decide to keep them intact despite the allure of reducing inflation.

While the Treasury has argued for a rollback, US Trade Representative Katherine Tai opposes any change in order to maintain leverage in negotiations with Beijing.

During his time in office, President Trump issued 15 executive orders that either directly or indirectly impacted US policy toward China, including several that promoted reducing trade ties.

Picking up where the 45th POTUS left off, President Biden is also using his executive powers to help facilitate America's economic decoupling from the People's Republic.

Not long after his inauguration, President Biden issued Executive Order 14005.

Dubbed the "Buy American" order, the initiative directs the US government, which spends $600 billion a year on procurement, to concentrate its efforts on sourcing goods and services produced or offered in America rather than looking overseas.

Writing for the Georgetown Public Policy Review, Conor Nolan calls the order "a prime example of the Biden Administration’s commitment to reducing reliance on critical foreign supply chain."

It's also, of course, part of the government's overall plan to make the US less dependent on China, particularly when it comes to strategically sensitive technologies and materials.

President Biden followed up on the order in late February 2021 by signing another initiative aimed at revitalizing American manufacturing and securing critical supply chains.

Executive Order 14017 called for an assessment of the nation's vital supply chains to identify vulnerabilities, as well as a series of reports outlining how they could be brought home.

Since the order was issued, seven cabinet agencies have identified weaknesses in America's critical supply chains and come up with multi-year strategies to address them.

They include shoring up the domestic supply of everything from semiconductors and lithium batteries to solar panels and wind turbines, which will minimize the country's reliance on China for these 21st-century essentials.

Sticking with the theme of presidential directives, the incumbent POTUS issued Executive Order 14032 on 3 June 2021.

The order builds on one signed by President Trump in November 2020 that banned Americans from investing in businesses linked to the Chinese military, adding firms that are involved in China's mass surveillance industry to the list.

Consequently, the number of targeted companies has increased from 44 to 59. They include some of the country's biggest firms, from leading chipmaker SMIC to telecom giants like China Mobile and the much-maligned Huawei.

And the powers that be in Washington want even more control over US investment in China...

The Biden administration is supporting a proposal drafted by a bipartisan coalition of lawmakers that would require US firms to notify the government before investing in critical sectors in China.

The aim of the proposed legislation, which is titled the National Critical Capabilities Defense Act of 2022, is to prevent American companies from financing technologies that could give China the edge and leave the US dependent on its exports. While it has yet to be introduced, many analysts expect the concept is not going away anytime soon. If Congress doesn't pass the act, it could be created via an Executive Order. 

The law would allow US authorities to screen investments made into Chinese entities and impose bans where necessary, expanding the scope of Executive Order 14032 significantly.

But while the proposal enjoys wide support on both sides of the aisle, it does have its detractors. One such opponent is Republican Senator Pat Toomey, who's worried about the potential loss of trade and impact on inflation, among other issues.

In a similar vein, the Department of Commerce has been busily adding Chinese companies to its Entity and Unverified Lists, which flag firms that present a potential threat to US national security and restrict American companies from trading with them.

Recent additions include Chinese biotech firms, wind and solar energy companies, semiconductor manufacturers, and drone makers.

Around 600 Chinese entities are on this list, and more than 110 have been added since the start of the Biden Administration.

When it comes to screening Chinese investment in American businesses, the US authorities have already got it down.

Having been given real teeth by both the Trump and Biden administrations over the last few years, the Treasury's Committee on Foreign Investment in the United States (CFIUS) has been increasing its scrutiny of transactions involving companies from the People's Republic.

In December 2021, the committee stepped in to block the sale of semiconductor firm Magnachip to a Chinese private equity firm.

Interestingly, Magnachip is actually based in South Korea with minimal US exposure. However, it's still deemed a US entity by the CFIUS as it's listed on the New York Stock Exchange and is incorporated in Delaware.

The ban shows how far the committee is prepared to go to protect American economic interests and national security, and to prevent the country from becoming beholden to China.

Another sign that America isn't messing around when it comes to decoupling from China is the big push to delist Chinese stocks that fall foul of US accounting practices – which is pretty much all of them.

No longer willing to tolerate China's rule-breaking, Washington has been getting serious about enforcing regulations that require companies listed on US stock exchanges to provide regulators with access to their financial audits.

In December 2020, the Holding Foreign Companies Accountable Act (HFCAA) passed into law.

The legislation was prompted by Chinese authorities' refusal to allow US regulators to inspect the audits of Chinese firms listed in the US, and authorizes the Securities and Exchange Commission (SEC) to delist companies that it's unable to scrutinize.

One of the stipulations of the law is that foreign companies listed in the US aren't state-owned or controlled.

This has long been a bone of contention, particularly in the case of Huawei. The tech corporation presents itself as an independent, privately-owned company – yet has extremely strong ties to the Chinese military and Communist Party. 

Chinese law prohibited US regulators from accessing audits of home-grown companies for national security reasons, creating a standoff between the two nations. The US gave Beijing until 2024 to change the law so the companies can release the audits. If not, every single one of the 248 Chinese firms listed in the US could be removed from America's stock exchanges, which would represent an almighty economic decoupling.

In a sign the US’ firm stance is making waves, it announced in December 2022 that China had granted full access to the audits. While the risk of removing hundreds of companies from the stock market has been taken off the table, they're now under strict scrutiny and will need to be in compliance. 

Other government agencies are applying pressure too. The Federal Communications Commission (FCC), for instance, has revoked the licenses of several Chinese telecom companies, including China Mobile and China Unicom, with the latter banned from operating in the US as of January 2022.

Hoping to reverse its US ban, China Telecom went to an appeals court to argue the FCC refused to hold a hearing on the matter when it lost its license in 2019. A three-judge panel rejected the appeal in December 2022. 

In January, the Department of Commerce also ended licences that allow American companies to export most items to Chinese telecom firm Huawei. While the tech giant had already faced restrictions set in place by the US government around 5G and artificial intelligence, it could still buy other unrelated products from US firms.

The decision is seen as the initial step in what could be a total ban on Huawei importing technology from the US. 

US sanctions are also helping to accelerate the decoupling of America and China.

Imposed in 2020 under the Trump administration and further enhanced under Biden, the sanctions are targeting businesses involved in human rights abuses in Xinjiang, Hong Kong, and Tibet, as well as companies linked to China's military.

The most impactful restrictions are enshrined in the Uyghur Forced Labor Prevention Act (UFLPA).

The law, which was passed in December 2021 and came into effect in June 2022, requires US importers to prove that any goods they source from Xinjiang weren't produced under duress by members of the Uyghur minority.

A high burden of proof is necessary, which could end up vastly reducing trade with the region. The legislation has also put pressure on overseas importers that supply US firms to sever ties with firms in Xinjiang.

On top of the tariffs, investment screenings, sanctions, and everything else, three key pieces of legislation have been passed under President Biden that should work wonders for reducing America's reliance on the People's Republic.

Signed into law in November 2021, the "once-in-a-generation" Infrastructure Investment and Jobs Act is providing $1.2 trillion in funding to update the nation's tired infrastructure.

Crucially, White House guidance calls for all materials for projects covered by the legislation to be sourced from US suppliers, with the explicit goal of reducing America's reliance on China for critical supplies.

Also in play is the $280 billion CHIPS and Science Act (where "CHIPS" stands for "Creating Helpful Incentives to Produce Semiconductors"). President Biden signed the bill in August 2022 with the aim of returning hi-tech manufacturing to the US, to the detriment of the People's Republic.

China is producing increasingly powerful chips – SMIC recently mastered the process of making advanced 7nm semiconductors – so US legislators are scrambling to retain America's competitive edge in this crucial sector.

The bipartisan CHIPS Act provides bountiful funding to develop artificial intelligence, quantum computing, robotics and other emerging technologies on home turf.

To make this happen, a whopping $52 billion has been earmarked to revive the domestic semiconductor industry. Most of the money is set to go on new chip fabrication plants, or "fabs" as they're nicknamed. 

The third key piece of legislation is the bumper Inflation Reduction Act, which Biden also signed into law in August 2022.

The act provides everything from tax breaks for domestic solar energy producers to grants for the purchasing of American-made electric vehicles.

Needless to say, US companies are pulling back from China in droves. Advocated by Treasury Secretary Janet Yellen, "friendshoring" or "ally-shoring" – the sourcing of materials from, and manufacturing in, countries with shared values – is a growing trend, with US firms increasingly ditching China in favor of nations such as Vietnam and India.

One example is the newly-formed Sustainable Critical Minerals Alliance, a group of countries including the US that has agreed to buy minerals from places with sustainable standards regarding the environment and labor alike. While the agreement doesn’t specifically exclude or prohibit Chinese minerals, the alliance aims to encourage more responsible mining, processing and even recycling practices — all areas where China has faced criticism. 

The partnership was announced in December 2022 at the 15th Conference of the Parties (COP15) to the Convention on Biological Diversity, co-hosted by China and Canada, in Montreal (pictured). 

There's also nearshoring, which involves relocating production to neighboring countries, and reshoring (also referred to as "onshoring"), which involves returning sourcing and manufacturing to the US.

A recent survey by digital tech corporation ABB found that 70% of US businesses are looking to bring their production facilities home, or closer to home at least.

Intel, for example, a major beneficiary of the CHIPS and Science Act, broke ground in September 2022 for two chip-making factories in Ohio.

Accelerated by the pandemic and associated supply chain nightmares, as well as the various incentives to quit China, moves to reshore hit a record high in 2021. And they seem to be gathering pace.

In a particularly strident move, the Biden administration has just barred all US tech companies that receive government funding from building "advanced technology" facilities in China for the next decade.

In a press briefing in September 2022, US Commerce Secretary Gina Raimondo explained that the US government will "be implementing the guardrails to ensure those who receive CHIPS funds cannot compromise national security… They’re not allowed to use this money to invest in China; they can’t develop leading-edge technologies in China; they can’t send [the] latest technology overseas."

The Department of Commerce quickly announced one of these "guardrails" in the form of new rules limiting the export of cutting-edge semiconductor and super computer technology to China. These prohibitions include not just the actual chips, but also the design software, production equipment and US-made components for the manufacturing equipment. And it doesn't stop there. 

The new rules apply to any company worldwide that uses US tech in their manufacturing process, which is likely all major chipmakers. It also bans US citizens and residents from working with Chinese firms. 

And it’s not just President Biden's administration taking action. In January, the newly-elected House of Representatives immediately created a select committee focused on China. With overwhelming and bipartisan support, the aim for the new committee is to monitor the return of jobs and supply chains from China to the US as well as securing intellectual property. 

While some democrats opposed the committee in fear it would be taken over by republicans or that it would stoke anti-Asian hate, House Speaker Kevin McCarthy assured critics that it'd be a bipartisan panel.  

Meanwhile, at state level, many US governors are banning the highly popular Chinese-owned social media app TikTok on state-owned internet networks and devices. Many colleges and universities are doing the same, and so has the federal government. The bans stem from concerns that the app's owner might share the vast quantities of data it holds on US citizens with the Chinese government.

At the moment, users such as college students have a work-around by switching their device off of Wifi and onto their data plan to access the app. However, as of late January, legislation to ban TikTok on all devices inside the US has been introduced in the Senate.

Decoupling from the People's Republic won't happen overnight. However, with all systems go, and bipartisan support, the days of America relying heavily on China for critical products and supply chains are most definitely numbered.

Now discover which American companies are moving out of China