US government targets China's technology sector

The United States is escalating the trade war against China. Donald Trump's US government has announced that it will take action against companies that it considers to be a risk to national security. Hundreds of Chinese companies are therefore threatened by sanctions. Under a new regulation, subsidiaries of companies on a US Department of Commerce blacklist known as the "Entity List" will also be subject to trade restrictions in the future. This was reported on Monday by the US daily newspaper Wall Street Journal.

According to the report, this is intended to close a loophole that Washington believes allows companies to set up subsidiaries to circumvent the sanctions of the entity list. Companies whose majority owners are on the list will also be subject to the same restrictions in the future.

The new regulation closes a "significant loophole" and "strengthens the export control system as a whole", writes the responsible Bureau of Industry and Security (BIS) of the US Department of Commerce on its website. Jeffrey I. Kessler, Under Secretary for Industry and Security at the US Department of Commerce, explained: "For too long, loopholes have enabled exports that undermine US national security and foreign policy interests. Under this administration, BIS closes these loopholes and ensures that export controls work as intended." The rule is scheduled to be officially published in the Federal Register on Tuesday and go into effect the same day.

Measures against China's technology sector

According to the Wall Street Journal, the change is a far-reaching measure that potentially affects thousands of companies worldwide, but the main target is likely to be China's technology sector. Chinese companies such as Huawei have numerous subsidiaries, which makes it difficult for the US to completely cut them off from US technology. However, the additions now made to the Entity List could burden US companies that rely on Chinese companies for raw materials or components and disrupt supply chains, the newspaper continues. Many US companies will now be forced to scrutinize their business partners more closely to ensure that they comply with the new regulation. This is likely to lead to an increase in compliance costs, the newspaper writes. Business with companies on the entity list is still possible under certain conditions. To do so, companies must apply for licenses and have them approved, with some general licenses being approved for 60 days to give companies time to make adjustments, according to the US government.

In the past, Washington has already imposed far-reaching export restrictions on particularly fast AI chips from US chip manufacturers such as Nvidia to China. Although Washington granted the first licenses for the export of Nvidia's H20 accelerators to China a few weeks ago, the semiconductor sector in particular is still under pressure due to Trump's tariff policy. The US government is trying to cut China off from US technology in the race for artificial intelligence (AI).

The expansion of the sanctions list comes just days after Washington and Beijing reached an agreement in the dispute over an impending TikTok ban in the US and could complicate ongoing trade talks between the two sides. The Trump administration has already placed dozens of Chinese companies on the Entity List. Moreover, earlier this year it asked US companies not to use chips from Huawei. China, in turn, recently sanctioned several US companies and restricted the export of rare earths.

(akn)