White House showdown: Will export controls sink US-China trade deal?

The Trump administration is preparing to add several major Chinese chipmaking companies to an export blacklist, but some officials are urging a delay in order to avoid undermining ongoing efforts to secure a comprehensive long-term trade agreement with China.

According to five sources familiar with the matter, quoted by the Financial Times, the U.S. Commerce Department has compiled a list of Chinese companies slated for inclusion on the so-called “entity list,” which restricts their access to American technology without government approval. Among those targeted is ChangXin Memory Technologies (CXMT), a Chinese memory chip manufacturer rapidly expanding its global market share in DRAM chips.

The Bureau of Industry and Security (BIS), the Commerce Department’s division responsible for export controls, has reportedly drafted the list to also include subsidiaries of Semiconductor Manufacturing International Corporation (SMIC) and Yangtze Memory Technologies Co. (YMTC), two of China’s largest chipmakers. Both SMIC and YMTC are already on the entity list.

However, the timing of the blacklist announcement is complicated by a recent trade truce between the U.S. and China. Over the past weekend in Geneva, the two countries agreed to a 90-day suspension of reciprocal tariffs as a goodwill gesture to facilitate negotiations toward a broader trade deal.

Some Trump administration officials argue that imposing export restrictions on critical Chinese technology firms now could jeopardise these negotiations. They caution that aggressive moves might disrupt the fragile progress toward reducing trade tensions.

Conversely, other officials point out that Republicans previously criticised the Biden administration for delaying decisive actions against China, accusing it of engaging in what they term “zombie diplomacy” — ineffective, prolonged negotiations that fail to confront Beijing’s competitive advances.

China hawks within the administration have strongly advocated targeting CXMT, which is aggressively increasing its footprint in the global DRAM market. Additionally, CXMT is spearheading efforts to develop high-bandwidth memory (HBM), a type of advanced chip technology crucial for running artificial intelligence models.

Adding these companies to the export blacklist forms part of a broader U.S. strategy to hinder China’s ability to acquire cutting-edge American chip technologies that could enhance the modernization of its military capabilities.

Once a company is placed on the entity list, American firms are barred from selling technology or equipment to it without a special government license, licenses which have grown increasingly difficult to obtain amid heightened security concerns.

U.S. security officials are particularly worried that China has previously gained too ready access to American technology, which may have contributed to its advances in developing hypersonic weapons and nuclear weapons modelling.

Requests for comment from the affected Chinese companies were unsuccessful. The Chinese embassy in Washington declined to address the specifics of the case but condemned the U.S., stating: “China firmly opposes the U.S.’s overstretching the concept of national security, abusing export controls, and maliciously blocking and suppressing China.”

By Tamilla Hasanova