US Considers Curbs on China-Made Goods Using US Software

TLDRs;

• The US may restrict exports of Chinese goods made with US software ahead of Trump-Xi summit.
• Potential measures target tech, aerospace, and manufacturing sectors using US-origin technology.
• The administration is exploring coordination with G7 allies on export controls to China.
• Compliance software providers may see rising demand from manufacturers tracking US software use.

The Trump administration is reportedly evaluating new restrictions on exports to China involving goods that contain, or are manufactured using, US software.

Sources familiar with the discussions, including a US official and three individuals briefed on the matter, have indicated that the proposed measures could cover a wide range of products, from consumer electronics like laptops to complex aerospace components such as jet engines.

This move comes in response to China’s recent tightening of export controls on rare earth elements, materials critical to modern technology manufacturing. The potential curbs would allow Washington to assert leverage in ongoing economic and technological negotiations with Beijing.

Coordination with Allies Likely

US Treasury Secretary Scott Bessent emphasized that all options remain on the table, noting that any new export controls would probably involve coordination with G7 partners.

While the administration could announce these measures as a form of strategic pressure on China, implementation is not guaranteed.

The timing of the potential announcement appears to be linked to an upcoming meeting between President Trump and Chinese President Xi Jinping in South Korea later this month. Experts suggest that the measures could serve as both a negotiating tool and a signal of US commitment to protecting domestic technological interests.

How Enforcement Could Work

US policymakers could enforce the new restrictions using Foreign Direct Product (FDP) rules outlined in 15 CFR 734.9, which grant the Bureau of Industry and Security (BIS) authority over foreign-made items that are direct products of US technology or software.

A “direct product” includes items produced through engineering, manufacturing, assembly, inspection, testing, or quality assurance involving US-origin technology.

The BIS has previously applied this framework to Russia and Belarus after the 2022 Ukraine invasion. Items not specifically listed on the Commerce Control List (classified as EAR99) but produced with US technology are subject to these regulations, potentially covering a broad range of Chinese-manufactured goods.

Implications for Manufacturers and Software Vendors

Non-US manufacturers exporting to China would need to track the use of US software in their production processes.

De minimis thresholds, such as 25% for most destinations, require firms to monitor and report the proportion of US-origin technology embedded in their products. Companies may also need to submit one-time filings detailing content percentages and fair market value.

The possible restrictions could spark demand for export compliance software, supply chain mapping tools, and automated BIS reporting solutions. Vendors that offer systems to track software dependencies, calculate de minimis shares, and ensure regulatory compliance may become essential partners for multinational corporations navigating this complex environment.

Strategic and Economic Significance

While the US considers these measures, the broader economic and diplomatic ramifications remain uncertain. Restricting exports of goods made with US software could impact both US and Chinese manufacturers, creating new compliance burdens and influencing supply chain strategies.

Observers note that the move is likely as much about signaling strength in trade negotiations as it is about practical enforcement.

As Washington evaluates its next steps, businesses and policymakers alike will be watching closely to determine how such controls, if implemented, could reshape the flow of technology and goods between the world’s two largest economies.

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