China isn’t complying with section 1 deal, Biden commerce official will say: Sources

U.S. Trade Representative Katherine Tai will announce Monday that China is not complying with the so-called phase one trade deal reached under former President Donald Trump’s administration, sources familiar with the matter told CNBC’s Kayla Tausche.

Under the agreement, China was supposed to purchase an additional $200 billion in U.S. goods over a two-year period, but the nation has not lived up to that pledge, sources said.

The announcement will represent some of the the Biden administration’s most forceful pushback against China. Tai will deliver remarks Monday on her review of China trade policy in Washington.

It is unclear how the USTR will respond. Sources told CNBC that the USTR is evaluating potential actions against China for its non-compliance, including possible additional tariffs.

Tai’s speech on Monday will mark the last three months of the deal, which was signed by Trump in 2019. It called for China to expand purchases of certain U.S. goods and services from Jan. 1, 2020, through Dec. 31, 2021.

China’s purchases of U.S. exports through August are estimated to be running at about 62% of the trade deal’s targets, Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington, told Reuters.