What Is the Phase 1 Agreement?

Signed in January 2020 between the United States and China, the “Phase 1” trade deal required Beijing to purchase an additional $200 billion worth of goods and services from the U.S. within two years, strengthen intellectual property protections, and provide greater market access for American companies. However, according to U.S. officials, China has failed to meet a significant portion of these targets. Bloomberg Economics data indicates that China’s purchases under the agreement have fallen short by approximately 40%. Experts note that the pandemic and global supply chain disruptions have further exacerbated the situation.

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What Does the Investigation Mean?

The “Section 301” investigation is known as one of the toughest tools used by the U.S. to counter unfair trade practices. If it is determined that China violated its obligations, Washington could impose new tariffs, import restrictions, or sanctions.

A USTR spokesperson told Reuters, “The United States remains committed to taking all necessary steps to uphold fair trade principles.” Meanwhile, China’s Ministry of Foreign Affairs responded, stating that “Beijing will not accept unilateral trade pressure from Washington.”

Tensions Rise Again

In recent months, trade tensions between the two nations have intensified once again. In September, China restricted the export of rare earth elements, while the U.S. imposed new tariffs on steel, aluminum, and battery components originating from China. Additionally, at the start of 2025, China failed to renew export registrations for certain U.S. meat processing plants, adding a new layer of uncertainty to the food trade.

Experts say the timing of the investigation is no coincidence. U.S. President Joe Biden and Chinese President Xi Jinping are expected to meet in November, and Washington may be seeking to gain a stronger negotiating position ahead of the talks.

Dr. Mark Feldman, an international trade expert at Georgetown University, commented:

“This investigation is more than just an economic move—it’s a diplomatic message. The U.S. is telling China, ‘There’s a price to pay when you don’t honor your commitments.’” Analysts warn that renewed trade tensions could put pressure on agriculture, energy, and technology stocks globally, with potential volatility expected in Asian markets if new U.S. tariffs are introduced.

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A New Chapter in the U.S.–China Trade War

The Trump administration’s strategy aims to reduce China’s dominance in global supply chains. Currently, China accounts for 70% of global rare earth production and 93% of permanent magnet manufacturing—key materials used in defense, technology, and AI infrastructure.

The updated export controls now extend to AI and blockchain-related software, potentially disrupting existing collaborations between American and Chinese tech firms.

Ripple Effects on Crypto: Mining Equipment Costs May Rise

The escalating trade tensions could indirectly impact the crypto market as well. Cryptocurrency mining relies heavily on semiconductors, AI-based systems, and advanced hardware—all of which could become more expensive under the new tariff regime.

Reports suggest that several Chinese mining equipment manufacturers have already begun establishing production facilities in the U.S. to mitigate future import-related risks.

Historical Data: Trade Disputes Tend to Pressure Risk Assets

Looking back, history shows that trade conflicts often lead to selling pressure on risk assets. During the 2018–2019 U.S.–China trade war, both equity and crypto markets experienced heightened volatility and sharp corrections.

Experts warn that the latest developments could similarly fuel short-term uncertainty, driving investors toward safe-haven assets such as gold and stablecoins.

Analysts Warn of Rising Volatility Amid Low Liquidity

Market analysts caution that weekend trading—often characterized by lower liquidity—could amplify volatility. Should China retaliate, the current bearish momentum in crypto markets may persist into the coming week.

In the long run, however, these economic frictions could accelerate decentralization within the crypto sector. A more geographically diverse mining ecosystem might emerge as global operations adjust to ongoing geopolitical and trade disruptions.

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Synteq Digital CEO Taras Kulyk revealed, “Thousands of units have been released,” suggesting that CBP deliberately targeted mining rigs due to officials who “didn’t like Bitcoin mining” and wanted to complicate the industry.

This situation is linked to rising US-China trade tensions, particularly in semiconductor technology. Bitmain’s Antminer S21 and T21 models were caught up in the issue after their chip supplier, Sophgo, faced scrutiny from the US Department of Commerce.

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Officials flagged some Sophgo-linked chips inside a Huawei AI processor last October, raising concerns over Huawei’s long-standing US sanctions. The Federal Communications Commission (FCC) claimed that these Antminer models could violate US regulations, pushing for the seizures. However, Sophgo has denied any connection to Huawei.

Despite reports of the releases, Luxor Technology COO Ethan Vera confirmed that only a small portion of the detained miners had been cleared. Authorities reportedly raised concerns about radio frequency emissions, but both Vera and Kulyk dismissed these claims as baseless.

As the US government tightens restrictions on Chinese imports, Donald Trump’s administration has imposed a 10% tariff on Chinese goods. In response, Bitmain has been working to expand its production facilities in the United States to avoid further shipping delays.

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