China's commerce ministry threatened countermeasures against Washington on Monday on two fronts: potential US investigations into Chinese AI companies, and new US tariffs imposed over alleged forced labour. Beijing said Washington had pledged during trade talks that replacement tariffs on Chinese goods would not exceed 20%.
China's commerce ministry threatened countermeasures on Monday after senior US officials said Chinese AI companies could face investigations, sanctions and trade restrictions over the alleged theft of US technology. The ministry accused the United States of what it called AI hegemonism, saying Washington was threatening Chinese companies with punishment over allegations they used distillation to copy advanced US AI models, despite what it called a lack of factual or legal grounds.
Moonshot AI sits at the centre of the dispute
The dispute centres on Beijing-based Moonshot AI, whose recently released Kimi K3 model has drawn attention for its coding capabilities and intensified debate in Washington over whether Chinese developers are copying US models or closing the technological gap through their own research. White House Office of Science and Technology Policy Director Michael Kratsios said last week the US government had information indicating Moonshot distilled Anthropic's Claude Fable 5 model to develop Kimi K3.
But Moonshot rejects that account, telling China's National Business Daily last week that its performance gains came from original changes to underlying architecture. Anthropic said in February it had identified more than 3.4 million interactions with its Claude models linked to Moonshot.
Washington puts sanctions and the Entity List on the table
Treasury Secretary Scott Bessent warned that Chinese companies could face financial sanctions or placement on the Commerce Department's Entity List, which restricts access to US technology. He wrote on X that such designations will be on the table when Chinese firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft: "open source is not open season on American IP".
That designation carries weight. Placement on the list could severely restrict Moonshot's access to US semiconductors, software and cloud services.
Forced-labour tariffs draw a separate protest
Beijing pressed a second complaint the same day. On Friday the United States imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the EU and China, alleging those countries failed to curb imports made by forced labour, with China assigned the 12.5% rate. The ministry called the duties unjustified, describing them as a typical act of unilateralism and protectionism, and urged Washington to remove them.
Even so, the ministry framed the tariffs as staying inside an agreed ceiling. It said Washington had pledged during trade talks that replacement tariffs on Chinese goods would not exceed 20%, noting the new 12.5% rate remained within that limit.
The duties could risk undermining a fragile trade truce reached between the two economies last year, and came as both sides prepare for a possible visit to the US by Chinese President Xi Jinping in September.
Sources:
- Investing.com — China accuses US of AI hegemonism
- Investing.com — China opposes US forced labour tariffs
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