The United States Trade Representative (USTR)’s office on Thursday said it has found China’s targeted dominance of the maritime, logistics, and shipbuilding sectors is “unreasonable” and burdens or restricts the U.S. commerce and is “actionable” under U.S. trade law.

China’s Foreign Ministry spokesperson Guo Jiakun in a press conference on Friday said that the Biden administration’s section 301 investigation against China targeting the maritime, logistics, and shipbuilding sectors “seriously violates WTO rules and is purely protectionism.”

The United Steelworkers (USW) last year led a coalition of labor organizations in filing a section 301 petition, calling for an investigation of Chinese commercial shipbuilding.

Five national labor unions filed a petition on March 12, 2024, requesting an investigation into the acts, policies, and practices of China “targeting the maritime, logistics, and shipbuilding sectors for dominance.”

The findings of the USTR probe did not include a specific recommendation of penalties against China, leaving next steps up to President-elect Donald Trump, who takes office today.

China’s shipbuilding empire is the latest flashpoint in the intensifying frictions between Washington and Beijing.

Foreign capital and technology are flowing into Chinese shipyards, which is accelerating Beijing’s ongoing naval buildup.

The USTR probe found “the PRC’s targeting for dominance unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition and creates dependencies on the PRC, increasing risk and reducing supply chain resilience.”

USTR further found that “PRC targeting for dominance burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.”

The United Steelworkers (USW) said the report “lays a firm and undeniable indictment, requiring a swift, decisive response,” mentioning that under section 301, a “report identifying unreasonable, burdensome and/or restrictive practices can lead to the president implementing policies to address the harm.”

This decision will fall to the incoming administration, USW clarified, adding that the “president Donald Trump has already indicated a willingness to hold the PRC accountable and has said that our maritime industries have suffered tremendously.”

David McCall, USW International president, said on Thursday that “by targeting global maritime, shipbuilding and logistics sectors, the Chinese Communist Party has systematically – and publicly -worked to dominate this vital sector, leaving us increasingly dependent on the PRC and its industries to meet our economic and national security needs.”

USTR noted in its release that “upon finding that the act, policy, or practice is actionable under section 301 of the trade act, the U.S. Trade Representative must determine what action, if any, to take in order to obtain the elimination of that act, policy, or practice.”

“The determination on any responsive actions would be considered at a later date in the next stage of the investigation,” it said.

China’s Foreign Ministry spokesperson Guo Jiakun said in the statement on Friday: “Various US studies show that the US shipbuilding industry lost its competitive advantage many years ago due to over-protection. The growth of relevant industries in China is a result of companies’ tech innovation and participation in market competition.

“It also benefits from China’s fully-fledged industrial manufacturing system and vast domestic market. The Biden administration blaming its own problems on China lacks factual basis and economic common sense.

“We urge the US to respect facts and multilateral rules, immediately stop its wrongdoings and return to the rules-based multilateral trading system. China will closely follow the investigation and take all measures necessary to firmly defend our rights and interests.”