US Weighs Software Export Restrictions in Escalating Tech Trade War with China

Potential Software Export Controls Signal New Front in US-China Trade Tensions

The Trump administration is reportedly considering sweeping restrictions on exports to China that contain or were produced using US software, according to sources familiar with the matter. This potential move represents a significant escalation in the ongoing trade dispute between the world’s two largest economies and could impact everything from consumer electronics to advanced industrial equipment.

Potential Software Export Controls Signal New Front in US-China Trade Tensions
From Threat to Potential Policy
Implementation Challenges and Economic Consequences
Historical Context and Precedent
Broader Trade War Landscape
Diplomatic Context and Next Steps

The proposed measures would target a “dizzying array” of products, including laptops, jet engines, and countless other items that rely on American software technology. This consideration comes as retaliation against China’s recent expansion of rare earth export controls, highlighting how trade tensions are increasingly moving into the technology and strategic resources sectors.

From Threat to Potential Policy

President Trump first hinted at these measures in an October 10 social media post, threatening to impose controls on “any and all critical software” by November 1. However, the specific mechanism for implementing these controls—restricting global shipments of items containing or made with US software—had not been previously detailed until now., according to recent research

According to sources who spoke anonymously because the discussions are not public, the administration could announce the measure as a pressure tactic without immediately implementing it. The fact that such broad controls are being seriously considered demonstrates the administration’s willingness to deploy increasingly aggressive tools in its economic confrontation with China.

Implementation Challenges and Economic Consequences

Trade experts note that while the US holds significant leverage in software technology, implementing such sweeping restrictions would present enormous practical challenges. Emily Kilcrease, a former trade official now at the Center for a New American Security, observed that “everything imaginable is made with US software,” underscoring the potentially vast scope of the proposed action.

The economic implications could be substantial for both countries and global supply chains. US stock indexes briefly extended losses when news of the potential measures emerged, with the S&P 500 falling 0.8% and the Nasdaq declining 1.3% before recovering somewhat. American technology companies could face significant blowback if their software becomes restricted in global supply chains.

Historical Context and Precedent

The proposed approach echoes restrictions the Biden administration previously imposed on Russia following its 2022 invasion of Ukraine. Those rules limited exports to Russia of items made anywhere in the world using US technology or software, establishing a precedent for using software and technology controls as economic weapons.

The Trump administration has shown a pattern of imposing then lifting export restrictions throughout the trade conflict. Earlier this year, the US imposed then removed restrictions on Nvidia’s and AMD’s AI chips, and similarly restricted then lifted controls on chip design software and other items between May and July.

Broader Trade War Landscape

These potential software controls represent just the latest development in an increasingly complex trade confrontation. Chinese imports currently face US tariffs averaging around 55%, which could skyrocket to 155% if Trump follows through on his threatened tariff increase. Meanwhile, China has expanded its controls on rare earth elements, where it dominates global supply of materials essential to technology manufacturing.

The Chinese embassy has responded to the potential measures by opposing what it characterizes as “unilateral long-arm jurisdiction measures” and vowing to “take resolute measures to protect its legitimate rights and interests” if the US proceeds with restrictions.

Diplomatic Context and Next Steps

The timing of these considerations is particularly significant, coming just weeks before a scheduled meeting between President Trump and Chinese President Xi Jinping in South Korea. US Treasury Secretary Scott Bessent is expected to meet with Chinese Vice Premier He Lifeng in Malaysia this week, potentially setting the stage for the leaders’ summit., as previous analysis

The ultimate implementation of these software export controls remains uncertain, with sources indicating that narrower policy proposals are also under discussion. The administration faces competing pressures between those advocating for aggressive measures and others favoring a more measured approach to US-China economic relations.

As both nations continue to weaponize their respective technological and resource advantages, the global economic landscape faces increasing disruption and uncertainty. The outcome of these deliberations could significantly reshape international trade patterns and technological development for years to come.