China Launches Investigation Into FedEx as Trade War Heats Up, Xinhua Report Says

China has launched an investigation into the mis-delivery of packages by FedEx, according to a report released Saturday by state-run news service Xinhua News Agency.

The delivery company diverted packages sent by Huawei, a major Chinese tech brand, according to the report. The missed deliveries allegedely “severely harmed clients’ legitimate rights and interests and violated China’s delivery industry regulations,” says Xinhua.

Four packages meant to go to Huawei’s offices in Asia were instead sent to FedEx’s Memphis, Tenn. headquarters. FedEx apologized for misrouting the packages, adding that it had not been told to intentionally divert them.

Amid the ongoing Trade War between the U.S. and China, the boxes drew particular notice because of American sanctions on Huawei. The phone brand was placed in May on the U.S.’s “Entity List,” which effectively prevents American firms from selling it technology without government approval. There’s speculation that the sanctions and heightened trade tensions led to missed deliveries.

China’s announced investigation into the delivery giant comes on the same day that its raised duties against $60 billion of U.S. goods went into effect — a rise from 5% to 25%. The increased levies come in response to President Donald Trump’s move: raising tariffs on $200 billion of Chinese products from 10% to 25%.

The president’s proposal to raise tariffs on footwear and apparel imports from China — a 25% increase on the sector — has American footwear companies concerned. Nearly 200 shoe companies sent letters to Trump in May asking him not to up duties. The announcement has also seen a shake-up of supply chains in China.

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