Chinese companies setting up operations outside China are likely to encounter increased scrutiny from governments regarding company ownership rather than simply the origin of goods. As firms diversify their supply chains away from China due to tariffs and disruptions, a new protectionism could emerge that focuses on ownership rules. Former US Trade Representative Michael Froman warns that companies attempting to bypass tariffs using transshipment might still face barriers, regardless of where goods are produced, highlighting a shift in trade regulations that could impact Chinese firms significantly.
"I think there will be a lot of focus on if China's using other countries for transshipment or if it's Chinese companies that are going into another country, you're going to see a new form of protectionism where we focus on rules of ownership, not rules of origin."
"So it doesn't matter that it's coming from Mexico or Indonesia. If it's a Chinese company and they're violating rules, or they're trying to circumvent the tariffs, they may well find themselves blocked from the United States."
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