On Friday, May 30, 2025, major stock averages, including the S&P 500, experienced a downturn, falling 1%, in response to reports that the United States is planning to expand its technology sanctions against China. These proposed measures signal a significant escalation in the ongoing tensions between the world’s two largest economies.
Intensified Scrutiny
Reports from Bloomberg indicate that the Trump administration is considering new regulations that could significantly expand the reach of US sanctions, primarily targeting Chinese firms. This potential move is reportedly driving a sell-off in markets due to concerns about its impact on global trade and interconnected industries.
The proposed regulations would require US government licensing for transactions with entities that are majority-owned by firms already on the US sanctions list. The aim is to close existing loopholes that have allowed Chinese companies to bypass sanctions by creating new subsidiaries.
This intensified regulatory scrutiny has raised alarms within the global tech and semiconductor industries, which have strong ties to Chinese firms. Major Chinese tech entities, such as Huawei Technologies Co. and Yangtze Memory Technologies Co., are already facing restrictions under the US Entity List. The new policy would further tighten these controls, potentially impacting their ability to operate globally and access critical technologies.
While the White House and Commerce Department have not yet officially commented, the proposed subsidiary rule could be announced as early as June. This rule would apply a 50% ownership threshold to companies linked to entities on the Entity List, Military End-User list, and Specially Designated Nationals (SDN) list. However, it’s noted that the details and timing are subject to change as the policy and related sanctions are not yet finalized.
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Source: Investing
