US mulls curbs on exports to China made with US software, sources say
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1 of 2 A cargo ship full of shipping containers is seen at the port of
Oakland, California, U.S., August 4, 2025. REUTERS/Carlos Barria
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cargo ship full of shipping containers is seen at the port of Oakland,
California, U.S., August 4, 2025. REUTERS/Carlos Barria Purchase Licensing Rights - Trump administration considers potential escalation in China trade war
- Measure could restrict shipments to China of goods containing or made with U.S. software
- Plan would retaliate against China's rare earth export restrictions if adopted
Oct
22 (Reuters) - The Trump administration is considering a plan to curb a
dizzying array of software-powered exports to China, from laptops to
jet engines, to retaliate against Beijing's latest round of rare earth
export restrictions, according to a U.S. official and three people
briefed by U.S. authorities.
While
the plan is not the only one being deliberated, it would make good on
President Donald Trump's threat earlier this month to bar "critical
software" exports to China by restricting global shipments of items that
contain U.S. software or were produced using U.S. software.
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On
October 10, Trump said in a social media post that he would impose
additional tariffs of 100% on China's U.S.-bound shipments, along with
new export controls on "any and all critical software" by November 1
without further details.
To be sure, the measure, details of which are being reported for the first time, may not move forward, the sources said.
But
the fact that such controls are being considered shows the Trump
administration is weighing a dramatic escalation of its showdown with
China, even as some within the U.S. government favor a gentler approach,
according to two of the sources.
"I
will confirm that everything is on the table," U.S. Treasury Secretary
Scott Bessent told reporters at the White House Wednesday when asked
about software curbs on China. "If these export controls - whether it's
software, engines or other things - happen, it will likely be in
coordination with our G7 allies."
U.S. stock indexes
dipped
following the Reuters report, before paring losses. The S&P 500
closed down 0.5% while the Nasdaq was about 1% lower at the market's
close.
Emily
Kilcrease, a former trade official now at the Center for a New American
Security, said software was a natural point of leverage for the U.S.
Still, such controls would be extraordinarily difficult to implement and
would lead to blowback for U.S. industry, she said.
"You would hope they are only putting threats on the table that they would carry out and stick with," Kilcrease said.
The
White House declined to comment. The Commerce Department, which
oversees export controls, did not respond to requests for comment.
A
spokesperson for the Chinese embassy did not comment on the specific
U.S. measures under consideration but said China opposed the U.S.
"imposing unilateral long-arm jurisdiction measures" and vowed to "take
resolute measures to protect its legitimate rights and interests" if the
U.S. proceeds down what it views as a wrong path.
MEASURE COULD BE USED TO PRESSURE CHINA
Administration
officials could announce the measure to put pressure on China but stop
short of implementing it, one of the sources said. Narrower policy
proposals are also being discussed, two of the people said.
"Everything
imaginable is made with U.S. software," one of the sources said,
highlighting the broad scope of the proposed action. The sources
declined to be named because the matter was not public.
The
move could disrupt global trade with China, especially for technology
products, and could come at a cost to the U.S. economy if fully
implemented.
It
echoes restrictions the Biden administration imposed on Moscow after
its 2022 invasion of Ukraine. Those rules restricted exports to Russia
of items made globally using U.S. technology or software.
Trump's Truth Social post came just three weeks before a
previously announced meeting with Chinese President Xi Jinping in South Korea, and a day after China dramatically expanded its
export controls on rare earth elements. China dominates the market for such elements, which are essential to tech manufacturing.
In
his post, Trump also accused China of considering "large scale Export
Controls on virtually every product" it makes and on some foreign-made
items, which he said would affect all countries, also starting November
1. Any such move would constitute "a moral disgrace," he added.
But questions have swirled about what Trump meant in his response by "critical software" controls.
While
Trump has slapped a series of tariffs on China since taking office in
January, he has wavered in his use of export restrictions against
Beijing, first imposing strict new curbs on shipments of Nvidia's and
AMD's AI chips before later removing them.
Likewise,
in late May, the U.S. imposed new restrictions on chip design software
as well as on other items after China held up rare earth shipments
needed by U.S. automakers and others, only to lift the restrictions in
early July.
Meanwhile, China has expressed its opposition to a Trump administration rule last month that
restricts U.S. companies from shipping goods and technology to companies at least 50% owned by sanctioned Chinese firms.
Chinese
imports currently face U.S. tariffs around 55%, which could shoot up to
155% if Trump follows through on his threatened tariff hike. But Trump
appeared to soften his posture on Beijing following the threats, posting
on October 12 that "The U.S.A. wants to help China, not hurt it!!!"
U.S.
Treasury Secretary Bessent is expected to meet with Chinese Vice
Premier He Lifeng in Malaysia this week, ahead of the meeting between
Trump and Xi in South Korea later this month.
Reporting
by Alexandra Alper and Michael Martina in Washington, Jeffrey Dastin in
San Francisco and Karen Freifeld in New York; Additional reporting by
Trevor Hunnicutt and Jeff Mason; Editing by Chris Sanders and Edmund
Klamann
Michael
Martina is a Washington-based foreign policy correspondent who covers
U.S.-China relations and the global impact of the two countries'
diplomatic, technology, and military competition. He was a member of the
Reuters team that won the Pulitzer Prize in Investigative Reporting in
2025 for uncovering fentanyl supply chains, and previously reported from
Beijing for more than a decade as a senior correspondent for the news
agency.
Jeffrey
Dastin is a correspondent for Reuters based in San Francisco, where he
reports on the technology industry and artificial intelligence. He
joined Reuters in 2014, originally writing about airlines and travel
from the New York bureau. Dastin graduated from Yale University with a
degree in history.
He was part of a team that examined lobbying by Amazon.com around the
world, for which he won a SOPA Award in 2022.