The Trump administration is gearing up for renewed confrontation with China on trade-related issues. Most observers have focused their attention on the threat of increased tariffs or the “renegotiation” and dismantling of existing free trade agreements.

In 2018, Washington could unleash a host of damaging policy weapons that have nothing to do with customs duties .  Instead, the theme of U.S. “national security” will be invoked to monitor, control and block a broad range of commercial activities between Chinese and American entities.

There are a variety of show-stopping situations that could transpire—literally from one day to the next—which could disrupt cross-border commerce:

  • Blocked foreign acquisitions or deals with U.S. “nationally sensitive” firms and industries
  • Increased sanctions against individuals, companies and countries
  • New export licensing requirements for a growing list of seemingly benign materials and components.

These scenarios fall under the lengthening shadow of “SIES”—strategic industries and economic security. The U.S has more than a dozen federal agencies enforcing hundreds of SIES regulations and restrictions.

Any multinational enterprise that fails to realize the gravity of these measures will have calamity visited upon it. Just ask ZTE, the Chinese telecoms company that recently paid $892 million to various U.S. government agencies. ZTE violated export controls and sanctions regulations on shipments of U.S. origin materials to Iran and N. Korea.

Despite being major trading partners—with all of the upside for business and investment—Beijing and Washington are both pursuing primarily self-serving agendas. It’s an unpleasant truth, but the national security dimension of the relationship is destined to intensify. Key technology sectors have been pulled into the fray of the China-U.S. rivalry, with spill over into the realms of cyber warfare, espionage and the militarization of space.

Read more about this article from Forbes here.

Image credit: Qilai Shen/Bloomberg