US may restrict software exports to China amid trade tensions over rare earths

US considering software export restrictions to China amid rising trade tensions

The US government is reportedly weighing new restrictions on software exports to China, according to a Reuters report published on Wednesday (22).
The move would serve as retaliation for China’s recent curbs on rare earth exports, critical materials used in electronics, batteries, and defense technologies.

The plan aligns with President Donald Trump’s earlier statement on Truth Social, where he vowed to limit China’s access to “critical software” developed in or with US technology.

Potential global and domestic impact

According to sources familiar with the matter, the restrictions could disrupt global trade flows and harm the US economy, given the deep technological ties between the two nations.

Possible outcomes under consideration include:

• A softer approach to minimize collateral damage to US industries;
• Trump announcing but not enforcing the measures to pressure Beijing politically;
• Experts warning that enforcing such controls would be technically complex and could set back US innovation.

Some officials reportedly favor a more moderate strategy, balancing national security with economic stability.

Background and precedents

Similar export controls were enacted under President Joe Biden after Russia’s invasion of Ukraine in 2022, restricting products and software built with US technology.
That move affected tools like CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), and CAD (Computer-Aided Design) software.

Official remarks and China’s reaction

US Treasury Secretary Scott Bessent confirmed that export restrictions are being considered, noting that any action would likely occur “in coordination with G7 allies.”

While the White House and Department of Commerce declined to comment, China’s embassy warned it would take countermeasures to defend its interests if Washington proceeds.

If implemented, the restrictions could further escalate US-China trade tensions and have a global ripple effect on the tech industry.