U.S. Treasury Secretary Scott Bessent on Thursday warned that China’s recent use of extraterritorial regulations is having a “chilling effect” on global supply chains, raising fresh concerns over international trade stability.

In remarks delivered during a policy discussion, Bessent said Beijing’s regulatory measures, which extend beyond its borders to influence foreign companies and transactions, are creating uncertainty for businesses operating across multiple jurisdictions. He stressed that such actions risk disrupting already fragile supply chains.

Bessent pointed to what he described as “provocative” steps by China, noting that companies worldwide are facing increasing compliance challenges due to overlapping legal demands. These developments, he said, could discourage investment and complicate cross-border trade flows.

The comments come at a time when global supply chains are still recovering from recent disruptions caused by geopolitical tensions and shifting trade policies. U.S. officials have repeatedly highlighted concerns about economic security and the need for transparent and predictable regulatory frameworks.

According to the Treasury Secretary, businesses are becoming more cautious in their operations due to fears of legal exposure and enforcement risks tied to China’s expanding regulatory scope. This, he warned, could slow down production networks and increase costs for industries dependent on international sourcing.

The issue of extraterritorial regulations has been a growing point of friction between Washington and Beijing. U.S. policymakers argue that such measures can interfere with the sovereignty of other nations and create barriers to fair competition in global markets.

While Bessent did not outline specific countermeasures, he indicated that the U.S. is closely monitoring the situation and engaging with allies to address the broader implications. Efforts are underway to strengthen supply chain resilience and reduce vulnerabilities linked to regulatory uncertainties.

There has been no immediate response from Chinese authorities to the remarks. However, Beijing has previously defended its regulatory actions as necessary to safeguard national interests and ensure compliance with domestic laws.

The latest comments underscore ongoing economic tensions between the world’s two largest economies, with supply chain security emerging as a central concern in global trade discussions.

Regulatory Impact | Business Upturn

US flags China’s ‘extraterritorial rules’ as threat to global supply chains