U.S. News: Trade Blacklist Set to Hit China Tech

“WASHINGTON -- The Trump administration said it is clamping down on companies that pose national-security risks by adding them to a trade blacklist, a move that threatens hundreds of Chinese companies and marks the latest salvo in the U.S.-China tech race.

 

Under the new rule, subsidiaries of companies that are on a Commerce Department blacklist known as the entity list would also be subject to trade restrictions. The goal is to close what the administration sees as a loophole that lets companies create subsidiaries to get around the entity list sanctions. If a company on the list is the majority owner of another firm, that business will now also be subject to the same restrictions.

 

"In order for entity-list restrictions to effectively protect U.S. national security and foreign-policy interests, the restrictions must also extend to foreign affiliates that are owned, directly or indirectly, by one or more listed entities," Commerce's Bureau of Industry and Security wrote in the rule, which was posted on the Federal Register website Monday. The document says the rule will be officially published on Tuesday and take effect that day.

 

The change is a broad move potentially affecting thousands of companies globally, but China's tech sector is seen by many industry executives as the main target. Chinese companies such as Huawei Technologies have many subsidiaries and global business partners, making it challenging for the U.S. to completely cut them off from domestic technology.

 

The additions to the entity list could burden domestic companies that rely on Chinese firms for raw materials or components and disrupt supply chains. Many businesses will now be forced to scrutinize their partners to make sure they are complying with the new rule, an effort that is expected to push up compliance costs. Trading routes for sectors such as semiconductors are already under pressure from President Trump's tariffs.

 

Administration officials are particularly concerned about U.S. technology enabling Chinese companies because of the escalating artificial-intelligence race between the two superpowers.

 

Monday's move could complicate continuing trade discussions between the two sides. The Trump administration added dozens of Chinese companies to the entity list and told companies not to use Huawei chips earlier this year, while China recently sanctioned several U.S. firms, told its companies not to buy AI chips from Nvidia and controlled exports of key raw materials for the tech sector.

 

The latest move highlights what some industry observers say is an inconsistent China tech policy from the Trump administration. Officials have granted China and other countries access to AI chips from companies such as Nvidia despite security concerns, moves seemingly at odds with crackdowns on Chinese tech companies.

 

A Commerce Department spokesperson didn't respond to a request for comment.

 

Administration officials have been weighing the new policy for months, people familiar with the process said. Many national-security hawks in the administration have been pushing for it, hoping for a win after other officials largely cast aside their views when deciding its chip-export strategy.

 

Companies seeking to do business with companies on the entity list wouldn't necessarily be totally out of luck. They would need to apply for licenses and get those approved, and some general licenses will be approved for 60 days to give companies time to adjust, the government said.

 

"I don't think that companies are ready day one to put full compliance measures into place, because its impact on their supply chains could be massive," said Opher Shweiki, former chief counsel at the Bureau of Industry and Security who is now a partner at law firm Akin Gump.” [1]

 

1. U.S. News: Trade Blacklist Set to Hit China Tech. Ramkumar, Amrith.  Wall Street Journal, Eastern edition; New York, N.Y.. 30 Sep 2025: A2.