The ongoing U.S.-China trade war has become one of the most significant geopolitical conflicts, affecting global economies and trade relationships. Since its inception under the Trump administration, this trade war has evolved from tariffs and trade restrictions into more complex legal battles involving technology and national security. In 2024, the legal challenge between DJI, a Chinese drone manufacturer, and the U.S. Department of Defense (DoD) highlights a new angle of this conflict: corporate legal action in response to U.S. sanctions.
Trade War: Origins and Impact
The U.S.-China trade war began in 2018 when then-President Donald Trump imposed tariffs on Chinese goods, citing trade imbalances and intellectual property theft. Since then, the trade conflict has continued, with tariffs and restrictions affecting multiple industries, including steel, textiles, and semiconductors. By 2024, the trade war has morphed into a broader geopolitical and economic rivalry that goes beyond traditional trade concerns. The battle for technological supremacy and national security concerns now drive much of the conflict.
The U.S. trade deficit with China, a significant factor that originally sparked the trade war, remains a point of contention. Despite efforts to reduce it, the deficit stood at over $382 billion in 2023. U.S. companies operating in China, particularly in high-tech sectors, continue to face challenges due to restrictive policies imposed by both nations. The focus of the conflict has shifted to strategic industries like semiconductors, artificial intelligence (AI), and military technologies, which are seen as crucial to national security for both nations.
Legal Battles: DJI and National Security Concerns
A new dimension of the U.S.-China conflict is the increasing number of legal disputes involving Chinese corporations targeted by U.S. sanctions. One of the most prominent legal battles of 2024 involves DJI, the world’s leading manufacturer of civilian drones. The company filed a lawsuit against the U.S. Department of Defense after being blacklisted as a “Chinese Military Company” (CMC) in 2022. DJI’s case is notable because it challenges the growing trend of U.S. sanctions against Chinese tech companies based on national security grounds.
DJI’s lawsuit underscores the complexity of the current U.S.-China relationship. The drone maker argues that its products are used for civilian applications, not military purposes, and it has taken steps to suspend operations in Russia and Ukraine to avoid their drones being misused in warfare. Despite these efforts, DJI remains on the blacklist, which prevents U.S. companies from trading with or investing in the Chinese firm. This legal battle reflects the broader struggle between Chinese companies and the U.S. government’s use of national security measures to justify economic sanctions.
The outcome of DJI’s lawsuit could have significant implications for other Chinese companies, like Huawei, that are facing similar challenges. However, experts are skeptical about DJI’s chances of success, citing the U.S. government’s broad application of national security laws to restrict Chinese companies’ access to the U.S. market. The lawsuit may help DJI raise public awareness of its stance, but legal precedents suggest that national security concerns often outweigh corporate interests in U.S. courts.
Trade War vs. Legal Battle:
While the U.S.-China trade war and the legal battle over sanctions share common roots, they represent distinct aspects of the broader geopolitical rivalry. The trade war is primarily focused on economic issues, such as tariffs, trade deficits, and market access, whereas the legal battles are centered on technology, intellectual property, and national security.
- Economic vs. Security Concerns: The trade war largely revolves around economic concerns, including the U.S. efforts to reduce its trade deficit with China and protect American industries from unfair competition. The legal battles, on the other hand, are driven by national security concerns, particularly related to technology. The U.S. government argues that companies like DJI and Huawei pose a threat due to their alleged links to the Chinese military or government.
- Corporate vs. Government Conflict: In the trade war, the U.S. government’s actions primarily target China’s trade policies, but in the legal battles, specific Chinese companies are being challenged through sanctions and blacklists. Companies like DJI are now directly suing the U.S. government, a new development in the trade conflict.
- Tariffs vs. Sanctions: The trade war is characterized by tariffs and quotas, which affect the flow of goods between the U.S. and China. The legal battles involve sanctions that restrict Chinese companies from accessing the U.S. market or technology. These sanctions are more targeted and can have long-lasting effects on individual companies.
Implications for Global Trade and Technology
The U.S.-China trade war and the ensuing legal battles have far-reaching implications for global trade and technology. The decoupling of U.S. and Chinese supply chains, particularly in high-tech industries like semiconductors and telecommunications, could reshape global trade patterns. In 2024, both countries continue to reduce their reliance on each other for critical technologies. The U.S. has ramped up efforts to produce semiconductors domestically, while China has accelerated its plans to become self-sufficient in key technologies.
However, this decoupling comes with significant challenges. Many industries, particularly those reliant on global supply chains, find it difficult to disentangle their operations from both the U.S. and Chinese markets. For example, China processes 80% of the minerals used in lithium-ion batteries, while the U.S. dominates the market for electronic design automation. The interdependence of these industries means that a complete decoupling is unlikely in the short term, despite the trade war and legal battles.
Additionally, the legal battles over sanctions may set new precedents for how national security concerns are used to justify economic restrictions. As Chinese companies like DJI challenge their inclusion on blacklists, they may influence future trade and legal policies, both in the U.S. and globally. However, the U.S. government’s broad application of national security laws means that these legal battles are unlikely to be resolved in favor of Chinese companies in the near future.
Economic conflict
The U.S.-China trade war, now in its sixth year, has evolved from a primarily economic conflict into a broader legal and geopolitical struggle. The legal battles between Chinese companies like DJI and the U.S. government highlight a new dimension of the conflict, where technology and national security concerns take center stage. As the trade war continues to reshape global trade patterns, the outcome of these legal battles could have far-reaching implications for both Chinese and American companies, as well as the global economy.
References
- “China–United States trade war,” Wikipedia, 2024.
- “Global supply chains and the US-China trade war,” Deloitte Insights, 2024.
- “DJI lawsuit against US Department of Defense,” Global Times, 2024.