China has introduced wide-ranging new regulations that aim to investigate and punish foreign companies that stop using Chinese suppliers in response to political pressure from their own governments.

The New York Times reports that foreign business groups have expressed strong concern about the vaguely worded rules, which took effect when Premier Li Qiang signed them on April 7. Analysts warned it could now be more difficult for foreign companies to divest from joint ventures in China, or to shift orders to overseas suppliers.

As part of an on-again, off-again trade war between the U.S. and China, with U.S. tariffs on imports from China rising as high as 145% at times, many U.S. importers have sought to source goods and materials from other nations, including Vietnam and India.

China is fighting back against what it sees as rising protectionism in the West, as U.S. President Donald Trump characterizes the trade imbalance between the U.S. and China as a “rip off.” After Trump introduced a range of new tariffs in April 2025, the trade deficit between China and the U.S. dropped 31.6% to $202.1 billion in 2025 from $295.5 billion in 2024, driven by a 29.7% drop in imports, bringing the deficit to its lowest level in over a decade, according to figures from the Office of the U.S. Trade Representative.

Manufacturers from multiple nations, but mostly the U.S., have been pulling out of China for nearly a decade, as higher wages and other factors toppled its dominance of low-cost, high-quality manufacturing. 

The 18-point regulations announced by Beijing, described in state media as an effort to “prevent security risks in industrial and supply chains,” supplement the already formidable authority afforded to Chinese regulators to investigate multinational corporations for moving supply chains out of China, says the Times.

The new supply chain regulations were issued as thousands of auto executives and engineers prepared to gather in Beijing for the city’s auto show April 24-May 3.