Will Trump govt curb export of 'critical' US software to China? Here's what we know as trade dispute heats up

The Trump administration is reportedly considering a significant escalation in trade tensions with China. The plan is to curb a wide range of software-powered exports to China, from laptops to jet engines.

This potential action, which could affect the import of several items, is being weighed as a retaliation against Beijing's latest round of rare earth export restrictions, Reuters reported.

While the plan is not the only one being deliberated, it involves restricting global shipments of products that contain US software or were produced using US software. This move aligns with President Donald Trump's threat earlier this month to bar “critical software” exports to China.

On October 10, Trump took to social media to announce that he would impose additional tariffs of 100% on China's US-bound shipments, along with new export controls on “any and all critical software” by November 1. However, he did not give any further details at the time.

What does this mean for China?

The consideration of these controls signals that the administration is weighing a dramatic escalation of its standoff with China, even as some officials within the US government 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 curbs on China. “If these export controls - whether it's software, engines or other things - happen, it will likely be in coordination with our G7 allies.”

The proposal comes just weeks ahead of 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 US software,” a source told Reuters, highlighting the broad impact of the proposed move. The measure could significantly disrupt global trade with China, particularly for technology products, and could come at a cost to the US economy if fully enacted.

Control may hurt US industry

Emily Kilcrease, a former trade official now at the Center for New American Security, noted that while software is a key point of leverage for the US, such controls would likely be extraordinarily difficult to implement and might even lead to blowback for US industry.

“You would hope they are only putting threats on the table that they would carry out and stick with,” Kilcrease said.

A Chinese spokesperson opposed the US “imposing unilateral long-arm jurisdiction measures” and vowed to “take resolute measures” to protect its legitimate rights and interests if Washington proceeds.

Administration officials may announce the measure as a way to put pressure on China, but could stop short of implementing it, one of the sources told Reuters. Meanwhile, narrower policy options are also under discussion, the news agency reported.

Trump softens stance on China

While Trump has previously imposed a series of tariffs on China since taking office in January, but then lifted certain export restrictions like those on AI chips and chip design software of Nvidia and AMD.

Despite threats of increased tariffs on China, potentially up to 155%, Trump appeared to have soften his posture on Beijing following the threats, posting on October 12 that “The USA wants to help China, not hurt it!!!”

In a social media post, Trump has accused China of considering “large scale Export Controls on virtually every product” it makes and on 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 is set to meet Chinese Vice Premier He Lifeng in Malaysia this week, ahead of the meeting between Trump and Xi in South Korea later this month.