Are We Trading Away Strategic Export Controls Now?

By Noah Rothman

Monday, June 09, 2025

 

White House National Economic Council Director Kevin Hassett told CNBC’s hosts on Monday that the White House may be willing to pare back its restrictions on sales of sensitive electronic components with potential military applications to China. In exchange, Beijing would be expected to speed up exports of rare earth minerals and magnets to the United States.

 

“I expect it to be a short meeting with a big, strong handshake,” Hassett told his interlocutors. Following that “handshake” deal, he continued, “any export controls from the U.S. will be eased and the rare earths will be released in volume.” As the Financial Times observed, Hassett’s remarks are “the first suggestion that Trump was willing to put export controls on the negotiating table.”

 

The FT continued:

 

Hassett did not specify which exports controls would be eased, but suggested that the administration would not loosen restrictions designed to prevent US chipmaker Nvidia from selling high-end chips to groups in China.

 

The Financial Times reported last month that the Trump administration was planning to put a number of Chinese chipmakers on a commerce department export blacklist, but that some officials wanted to hold off because they believed the move would have a negative impact on US-China trade talks following the “ceasefire.”

 

Trump and his administration’s officials have alleged in recent weeks that the Chinese have failed to honor the agreements around rare earth exports at talks in Geneva last month, where the “cease-fire” was first hammered out. Sources close to Beijing maintain that they’re just following procedure, albeit as unenthusiastically as possible. But the suggestion that U.S. export controls are now subject to negotiation has the Chinese side licking its lips.

 

“The issue of US export controls may no longer be an area that is completely non-negotiable in the future,” said Cui Fan, a Beijing-based business professor and adviser to the country’s commerce ministry. “Historically, export controls have never been used as leverage for trade negotiations,” one trade attorney told the Wall Street Journal. “There is no precedent for this.”

 

There are plenty of products covered by U.S. export controls, and for good reason. As the Journal revealed, they are likely to include “jet engines and related parts, which China needs to make its own commercial aircraft; software required by Chinese companies to produce chips; and ethane, a component of natural gas important in manufacturing plastics,” all of which are “dual-use” and could have strategic dimensions.

 

If the Trump administration is flexible on U.S. export controls to Beijing, it would be yet another unilateral step back from the trade hostilities Trump himself inaugurated. Indeed, it might be two or three steps back since Trump actually inherited export controls on sophisticated chips from the Biden administration.

 

“The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation,” a Department of Commerce spokesperson said last week in relation to the rescission of the so-called “AI Diffusion Rule,” which the administration claimed had “undermined U.S. diplomatic relations with dozens of countries by downgrading them to second-tier status.”

 

“We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance,” the Commerce Department release continued. Maybe. Chinese interests with investments in AI dominance seem just as enthusiastic about the administration’s decision. It is yet to be determined whether this puts us on a path to the “better deal” with China.