The Trump administration is reportedly considering a significant escalation of trade tensions with China. The plan is to curb a wide range of software-driven exports to China, from laptops to jet engines.
The potential action, which could affect imports of several items, is being considered in retaliation for Beijing’s latest round of restrictions on rare earth exports, Reuters reported.
While this plan is not the only one under consideration, it includes restrictions on global shipments of products that contain US software or were manufactured using US software. The move is in line with President Donald Trump’s threat earlier this month to ban exports of “critical software” to China.
On October 10, Trump announced on social media that he would impose additional 100% tariffs on US-bound shipments to China by November 1, along with new export controls on “any and all critical software.” However, he did not provide any further details at the time.
What does this mean for China?
The consideration of these controls signals that the administration is considering a dramatic escalation of its standoff with China, although some U.S. government officials prefer a less aggressive approach, according to Reuters.
“I will confirm that everything is on the table,” US Treasury Secretary Scott Bessent told reporters at the White House on Wednesday when asked about software restrictions in China. “If these export controls – whether it’s software, engines or other things – happen, it will probably be in coordination with our G7 allies.”
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The proposal comes just weeks before a previously announced meeting with Chinese President Xi Jinping in South Korea and shortly after China dramatically expanded its export controls on rare earth elements, a sector where China continues to dominate.
“Everything imaginable is made with American software,” the source told Reuters, underscoring the broad impact of the proposed move. The measure could significantly disrupt global trade with China, particularly in technology products, and, if fully enacted, could come at the expense of the U.S. economy.
The inspection could hurt American industry
Emily Kilcrease, a former trade officer now at the Center for a New American Security, noted that while software is a key point of leverage for the US, such controls would likely be extremely difficult to implement and could even backfire on US industry.
“You would hope that they only put threats on the table that they would carry out and stick to,” Kilcrease said.
A Chinese spokesman opposed the US “imposing unilateral, long-arm jurisdiction” and vowed to “take resolute measures” to protect its legitimate rights and interests if Washington followed suit.
Administration officials may announce the measure as a way to put pressure on China, but could stop implementing it, one of the sources told Reuters. Meanwhile, narrower policy options are also being discussed, the news agency said.
Trump softens stance on China
While Trump has previously imposed a number of tariffs on China since taking office in January, he has since lifted certain export restrictions, such as those on AI chips and chip design software from Nvidia and AMD.
Despite threats of increased tariffs on China, potentially up to 155%, Trump appeared to soften his stance on Beijing following the threats, posting on October 12 that “The US wants to help China, not hurt it!!!
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In a social media post, Trump accused China of considering “extensive export controls on virtually every product” it manufactures and some foreign-made items, which he said would affect all countries. Any such move would constitute a “moral disgrace”, he added.
US Treasury Secretary Bessent will meet Chinese Vice Premier He Lifeng in Malaysia this week ahead of a meeting between Trump and Xi in South Korea later this month.
