The U.S. Department of Commerce’s preliminary decision to apply U.S. anti-subsidy law to imports from China poses a risk of increasing protectionism, says National Bank Financial in a research note.

NBF notes that this is the first time countervailing duties will be imposed on imports from a non-market economy. It adds that it is important to note that the decision applies only to coated free paper, a category that accounts for less than 0.1% of total imports from China.

However, it also warns that this decision raises one big risk, “that other firms/industries will now want to use the same process to obtain protection. This is all the more probable since skepticism about the benefit of unfettered trade in goods and services has been gaining traction among U.S. politicians in recent months.”

NBF reports that the trade deficit with China already accounts for 1.7% of U.S. GDP (or 53% of the non-petroleum trade deficit), a proportion that is much larger than the U.S.-Japan trade deficit that prevailed prior to the plaza accord that led to a yen appreciation. “The exponential deterioration of the China-U.S. trade balance coupled with the very slow pace of appreciation of the Renminbi could very well tempt Washington into slapping more countervailing duties on China,” it warns.