The Trump administration is weighing a sweeping plan to curb software-powered exports to China, targeting everything from laptops to jet engines as it prepares to retaliate against Beijing’s latest round of rare earth export restrictions. A U.S. official and three people briefed by U.S. authorities confirmed the measure is under consideration, though it may not move forward. This development, reported for the first time, represents a dramatic escalation in the trade showdown between Washington and Beijing.
President Donald Trump issued a threat earlier this month to bar “critical software” exports to China, and now sources reveal what that could actually mean for you. The plan would work by restricting global shipments of items that contain U.S. software or were produced using American technology. On October 10, Trump’s social media post declared he would impose additional tariffs of 100% on China’s U.S.-bound shipments alongside new export controls on “any and all critical software” by November 1 without further details.
The fact that such controls are being considered shows the administration is weighing a dramatic escalation, even as some within the U.S. government favor a gentler approach, according to two of the sources. The option remains on the table, but administration officials could announce the measure to put pressure on China yet stop short of implementing it, one of the sources explained.
U.S. stock indexes briefly extended losses on the news, with the S&P 500 down 0.8% and the Nasdaq 1.3% lower before paring their losses. The market turbulence reflects investor anxiety about what a full-scale software export ban could mean for global trade with China, especially for technology products.
The White House declined to comment on the developing situation. 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 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 a “wrong path”.
“Everything imaginable is made with U.S. software,” one of the sources revealed, highlighting the broad scope of the proposed action. Narrower policy proposals are also being discussed, two of the people confirmed. The sources declined to be named because the matter was not public.
This move could disrupt trade relations with China and come at a cost to the U.S. economy if fully implemented. The strategy 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 accused China of considering “large scale Export Controls on virtually every product” it makes and on some foreign-made items, which would affect all countries, also starting November 1. “Any such move” would “constitute” a “moral disgrace,” he added. Questions have swirled about what Trump meant in his response by “critical software controls”.
Trump has slapped a series of tariffs on China since taking office in January, but he has wavered in his use of export restrictions against Beijing. He 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 from last month that restricts U.S. companies from shipping goods and technology to companies at least 50% owned by sanctioned Chinese firms.
What This Means For Trade And Tariffs
Chinese imports currently face U.S. tariffs of around 55%, which could shoot up to 155% if Trump follows through on his threatened tariff hike. Yet Trump appeared to soften his posture toward Beijing following the threats, posting on October 12 that: “The U.S.A. wants to help China, not hurt it!”
U.S. Treasury Secretary Scott Bessent said Friday he 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. These diplomatic engagements suggest both sides are exploring paths forward even as tensions remain high over the dizzying array of trade issues separating the world’s two largest economies.
