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The recent escalation in the US-China trade conflict is being traced back not to China’s latest export restrictions, but rather to a September decision by the US. While China's expansion of rare earth export controls initially appeared to be the spark, analysts now say the real trigger was the United States' broadening of its trade blacklists, a move that provoked strong responses from both China and Europe, according to a South China Morning Post report
A Quiet Rule Change With Global Repercussions
On September 29, the US Bureau of Industry and Security (BIS), part of the Commerce Department, quietly expanded its export restrictions. The change meant that not just listed companies, but any subsidiaries owned 50 per cent or more by them, would also fall under the same licensing requirements. Previously, companies had to seek export licenses only for directly listed entities, states the report.
This technical but impactful update significantly raised the number of firms affected and made compliance harder. Exporters are now burdened with the responsibility of determining ownership structures before engaging in trade, an often complex and opaque task. As a result, international supply chains are expected to face serious disruptions.
China's Strong Response: A View Of Escalation
China reacted swiftly and sharply. In an official statement, China’s Commerce Ministry condemned the US move, saying,
"This move by the US is extremely egregious in nature. It seriously infringes upon the legitimate rights and interests of the affected enterprises, severely disrupts international economic and trade order and gravely undermines the security and stability of global industrial and supply chains."
According to a report by the South China Morning Post, Goldman Sachs analysts noted that although the US rule applies globally, it is clearly perceived by Beijing as a deliberate escalation aimed at Chinese technology firms.
Europe Joins In: Netherlands Seizes Nexperia
Adding fuel to the geopolitical fire, the Dutch government seized control of Chinese-owned chipmaker Nexperia earlier this month. Officials believed the company’s Chinese stakeholders were preparing to shift production to China, raising national security concerns. The Dutch move included removing Nexperia's Chinese CEO, Zhang Xuezheng, an unprecedented action in European tech policy, according to a Times of India report.
Qualcomm And Broader Impacts
China didn’t stop at rhetoric. The blacklist expansion reportedly triggered retaliatory measures against key American firms, including US chip giant Qualcomm. These moves underscore how US policy decisions can ripple across global markets and trigger cross-border pushback. While over 1,100 Chinese companies are reportedly already on the US Entity List, the recent expansion has only deepened the divide, making future collaboration between the US and Chinese tech sectors more uncertain than ever.
