Retaliation: US considers broad software curbs on China

The Trump administration is considering a plan to halt a dizzying array of software-enabled exports to China, from laptops to jet engines, to retaliate against Beijing’s recent rare earth export curbs, according to a U.S. official and three people briefed by U.S. officials.

While the plan is not the only option on the table, it would make up for President Donald Trump’s threat in early October to ban “critical software” exports to China by restricting global shipments of items containing or produced using U.S. software.

On October 10, Trump said in a social media post that he would impose 100 percent additional tariffs on Chinese shipments to the United States and impose new export controls on “any critical software” by November 1, without providing further details. Sources said that the measure, the details of which were announced for the first time, may of course not proceed.

But the fact that such controls are being considered suggests that the Trump administration is weighing a dramatic escalation in its showdown with China, even as some within the U.S. government prefer a softer approach, two sources said.

“Obviously the United States is looking for leverage points, and we’re really good at software, so it’s not that surprising that this administration would take notice,” said Emily Kilcrease, a former trade official now at the Center for a New American Security.

But he said it would be extraordinarily difficult to implement and would backfire for U.S. industry.

“You just hope they put threats on the table that they will carry out and stick with.”

US stock indices briefly extended their losses on this news; The S&P 500 fell 0.8 percent and the Nasdaq fell 1.3 percent before recouping its losses.

The White House declined to comment. The Commerce Department, which oversees export controls, did not respond to requests for comment.

A spokesman for the Chinese embassy did not comment on specific U.S. measures being considered, but said China opposes the U.S. “unilateral imposition of long-term jurisdictional measures” and has promised to “take decisive measures to protect its legitimate rights and interests” if the U.S. goes down what it sees as the wrong path.

One of the sources said administration officials could announce measures that would put pressure on China but could back out of implementation. Narrower policy proposals were also discussed, two of the sources said.

“Everything imaginable is being done with US software,” one of the sources said, noting the broad scope of the proposed action. The sources declined to be named because the matter is 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.

In his post, Trump also accused China of considering “large-scale Export Controls on almost every product and some foreign-made products,” which he said would affect all countries starting November 1. He added that such a move would constitute a “moral disgrace.”

But there were questions about what Trump meant by “critical software” controls.

While Trump has imposed a series of tariffs on China since taking office in January, he has hesitated to use export restrictions against Beijing; It first imposed, then lifted, strict new restrictions on shipments of Nvidia’s and AMD’s AI chips.

Chinese imports currently face US tariffs of around 55 percent; This rate could rise up to 155 percent if Trump implements the tariff increase he threatens. However, Trump appeared to soften his stance towards Beijing after the threats, posting on October 12: “The US wants to help China, not hurt it!!!”

U.S. Treasury Secretary Scott Bessent said on Friday that he expects to meet with Chinese Vice Premier He Lifeng in Malaysia this week, ahead of an October meeting between Trump and Xi in South Korea.

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