U.S. export controls are evolving from a narrow national security tool to a broader trade policy instrument, reflecting U.S. President Donald Trump’s willingness to blend economic and national security negotiations and such controls’ growing impact on economic growth, technological leadership, and geopolitical influence.Trade policy experts are now scrambling to learn the world of export controls, which were a key sticking point in a series of high-stakes trade negotiations this summer between U.S. and Chinese officials.
For the national security community, however, this shift may portend even more dramatic changes: deploying export controls as a multi-purpose instrument creates risks for core U.S. security interests, including the perception that national security can be traded away for commercial gain. To alleviate such risks, U.S. policymakers should clarify which national security export controls are not up for negotiation and reassure allies and the private sector that export control policy will be applied consistently and predictably.
The Traditional Role—and Expanding Reach—of Export Controls
To understand the shift currently underway, it is helpful to first review the traditional rationale and use cases of export controls. Export controls are statutory and regulatory measures designed to restrict the transfer of certain goods, technologies, and services across national borders. The United States has primarily used export controls to prevent strategic competitors from acquiring dual-use technologies, curtail the proliferation of weapons of mass destruction (WMD), sanction foreign states or entities, and support human rights by blocking the transfer of tools and technologies that could facilitate surveillance or repression.
Traditional export controls advanced national security in significant ways. For example, the Missile Technology Control Regime ensured that participating states did not transfer advanced technologies such as ballistic missiles and long-range unmanned aerial vehicles abroad unless the transfers were first reviewed and approved by their governments. The Nuclear Suppliers Group and the Australia Group track emerging products that have potential nuclear and chemical weapons applications, respectively. When warranted, they place these items on control lists to guide government export regulations. Similarly, the Wassenaar Arrangement seeks to control emerging dual-use technologies, such as advanced semiconductors and quantum technologies. However, the effectiveness of these regimes has been undermined in recent years, as Russia has begun blocking proposals for typically agreed-upon controls.
At the same time, as successive U.S. administrations have recognized the potentially vast power and leverage associated with restricting access to certain U.S. goods and technologies, they have used these tools in more expansive ways, stretching the traditional export control regimes beyond core national security interests. The first Trump administration added Huawei to the Bureau of Industry and Security’s (BIS) Entity List, on the grounds that the company was diverting U.S. technology to Iran. Over time, however, the policy narrative behind export controls on Huawei evolved, focusing on the potential that the PRC’s intelligence services could put digital backdoors in Huawei’s global telecom system. This claim provided the rationale to impose stringent export controls restrictions on Huawei globally through the novel use of U.S. unilateral extraterritorial controls. Though the rationale for these export control measures was still rooted in national security, the controls had a much greater commercial impact in restricting Huawei’s global telecom business.
Export Controls as Tools of Competition and Coercion
The first Trump administration began controlling the export of semiconductor manufacturing equipment to China, working with the Netherlands and Japan. The Biden administration significantly expanded this policy, restricting both the equipment to make chips and the most advanced chips themselves. Again, these controls were founded in a national security rationale, preventing China from using advanced AI for military modernization purposes. Yet over time the rationale for the semiconductor controls also expanded into a broader contest in winning the AI race. While export controls traditionally had narrow economic effects, U.S. controls on China’s compute supply have had sweeping commercial impacts. This was, in part, a predictable outcome of China’s military-civil fusion strategy, which sought to break down barriers between the country’s civilian commercial and research technology sectors and the defense industrial sector: for the United States to constrain China’s military modernization, it would also need to constrain civilian technological development.
Over time, U.S. allies became more dubious of Biden’s national security rationale regarding America’s unilateral export controls targeting the PRC’s semiconductor industry. Allies questioned whether these actions—and U.S. pressure to align their own controls with those of the United States’—were rooted in commercial competition with China, rather than narrower national security concerns.
Nor was the more expansive approach to export controls limited to the Chinese tech sector. Following Russia’s full-scale invasion of Ukraine in 2022, the Biden administration and U.S. partners and allies imposed a wide-ranging export control program on Russia and Belarus. The controls targeted not only factories that produce weapons, but also luxury items such as Gucci and Versace bags and clothing. The rationale for these controls was to impose economic pain on Russian and Belarussian elites–a form of coercive pressure more often pursued via sanctions than export controls.
In its waning days, the Biden administration released perhaps the most expansive and ambitious U.S. export control policy ever attempted—the AI diffusion rule. The rule placed strict limits on how many advanced AI chips could be exported to specific countries around the world. It had an explicit industrial policy objective of keeping leading technological capabilities in the United States and ensuring U.S. AI compute dominance. Early on, the second Trump administration announced that it would rescind the rule. It criticized the rule as overly bureaucratic, burdensome for industry, and an unnecessary constraint on U.S. competitiveness. It remains to be seen what rule – if any – the current administration will put in its place.
At the same time, China has been developing its own export control capabilities, using its dominance over key strategic sectors as a leverage point for broader geopolitical objectives. China has long had an export controls system, developed in part to implement its commitments as a member of the Nuclear Suppliers Group, a group of nuclear supplier countries that seek to limit proliferation of nuclear weapons. In 2010, China demonstrated its willingness to use export restrictions for political aims, targeting Japan with ad-hoc unilateral controls on rare earths in response to bilateral tensions. In the face of increased U.S.-led export controls targeting China in 2020, the Chinese government enacted a new export control law, which formalized its dual-use list and created an unreliable entities list, mirroring the United States. In late 2024, China revamped its dual-use regulations and imposed controls on critical minerals. In early January of 2025, China added 28 US companies to its unreliable entities list.
This expansion of export controls has set the stage for increasing conflation–and potential conflict–between the worlds of trade and national security. So long as export controls were understood as a narrow tool of national security with limited commercial or economic impact, they could be carved out from normal international trade rules and obligations and generally ignored by most trade and economic policy officials. But the new world of export controls is coming into more direct contact with the trade regime–most immediately in the context of the current U.S.-China trade wars.
The Trump Administration Puts Export Controls Up For Negotiation
When Trump imposed steep tariffs in April, the Chinese government retaliated by exploiting its dominant position in the global market for rare earths. China imposed sweeping new controls on the export of certain rare earth minerals and magnets critical for the production of semiconductors, autos, and various defense industrial base goods. While it was not unprecedented for China to leverage global economic chokepoints to pressure foreign governments, the United States appeared unprepared to weather such disruption.
After several weeks of mounting trade tensions, U.S. and Chinese officials agreed in Geneva to deescalate their tariff fight. This included easing China’s rare earths controls. At the same time as these negotiations were being finalized, the Commerce Department issued a statement warning industry that using Huawei’s Ascend AI chips “anywhere in the world” violated U.S. export controls. The Chinese government was furious, arguing that the United States’ export control move had undermined the trade truce agreed days earlier. It is not clear if the U.S. officials negotiating on trade issues with China were involved in the export control decision, or or were aware of when the statement would be released. But from China’s perspective, even a small shift in U.S. export control policy violated the spirit of the trade deal the two sides had just struck, and set back bilateral cooperation.
Chinese and U.S. officials agreed to meet again in June. Shortly before the next round of negotiations, media reported that the United States was imposing new additional export controls on China, including on software used for designing semiconductors, as well as ethane, a gas used in petrochemical production. Ethane did not meet the traditional strategic rationale for U.S. export controls: it is a commodity that is widely available from alternative sources and is not closely linked to military production. Rather than directly advancing U.S. national security, these controls were clearly an effort by U.S. trade negotiators to gain leverage over China, signaling that other restrictions that the U.S. had imposed on China’s advanced semiconductor industry might also be up for negotiation. Coming out of this second round of U.S.-China trade talks, China pledged to resume more regular export of critical minerals to the United States, and the United States agreed to unwind the export controls imposed just days earlier. Negotiating over export restrictions was now normalized as part of U.S.-China trade diplomacy.
The trade and export control truce, however, was fragile. On September 29, the United States introduced the “Affiliates Rule” change to the Entity List, which substantially expanded the number of firms subject to U.S. export controls. On October 9, 2025, likely partly in response to this U.S. policy change, China imposed extraterritorial controls on rare earths and added 14 additional companies to its Unreliable List, escalating trade tensions between the U.S. and China. In response to the latest Chinese export control restrictions, Trump announced on October 10 that he would impose 100 percent tariffs on all Chinese goods beginning November 1, though he has also signaled a willingness to negotiate with China on these new restrictions.
Are Export Control Licenses for Sale?
Several weeks after the June 2025 London talks concluded, the United States announced it would soon begin allowing Nvidia to sell its H20 chips to China, leading to speculation that this was a concession under the framework agreement in order to maintain access to Chinese critical materials. However, Chinese officials then contradicted the U.S. account, stating the United States made a unilateral decision to allow H20 sales, and this policy shift was not taken at China’s request. Additionally, the Trump administration then announced the loosening of these export controls would only come with a twist: Nvidia and AMD would be able to receive export control licenses to sell certain of their AI chips to China, but only if they agreed to pay the U.S. government 15 percent of their revenues from the sales.
This introduced yet another foundational—and deeply controversial—shift in U.S. export control policy. In addition to now being a point of leverage in foreign trade negotiations, the Trump administration also now views export controls as a potential source of revenue. The potential legal challenges to implementing this at scale may be significant. The U.S. constitution bans export tariffs. Furthermore, the primary export control legislation—the 2018 Export Control Reform Act (ECRA) —explicitly states that the government will not charge fees for the “submission, processing, or consideration” of export control licenses. Treasury Secretary Scott Bessent has noted he is interested in pursuing this model with other companies, but it is not clear how such an effort might progress.
Strategic Implications of Negotiating Export Controls
The key takeaway from these developments is that the U.S. government now treats export controls as a flexible tool to serve a wide range of policy objectives. The semiconductor controls on China that have been building since the first Trump administration demonstrated the use of such controls in broader geopolitical and tech competition. The AI diffusion rule represented an experiment in using export controls to tilt global markets in favor of U.S. market development. In imposing controls as a bargaining chip in trade negotiations with China, the second Trump administration sought to use such controls as a transactional means to gain negotiating leverage. And the most recent suggestion that companies should pay a share of their profits as a fee back to the U.S. government raises the spectre of the use of export controls as a revenue source.
But stretching this tool to so far beyond its traditional, narrow national security purposes will come with costs and trade-offs—and could undermine the original intent of export controls.
To begin with, in the specific context of managing bilateral trade, technology, and security relationships with China, the United States now faces growing pressures from China to further roll back U.S. technology controls. Traditionally the United States refused to entertain the question of negotiating away export controls, contending that such national security actions would not be a concession to be traded off against commercial or other objectives. But now that this window has been opened, Chinese negotiators are likely to press for further relaxation of U.S. controls. Indeed, in the run up to a third round of U.S.-China talks in Stockholm this summer, reporting suggests the Trump administration decided to freeze any new export controls to avoid upsetting trade talks. The challenge for U.S. negotiators will be to distinguish between foundational export controls, that are central to long term U.S. security objectives and not up for negotiation, and transactional controls implemented to gain leverage, which are bargaining chips that could be traded away.
Second, this shift will also complicate U.S. diplomatic efforts to encourage partners in Europe and Asia to align their export controls with those of the United States. These countries have long been more skeptical of aggressive export controls than the United States is—and also worried that the United States may at times be pursuing an economic competitiveness agenda under the guise of national security concerns. They will be even more reluctant to follow U.S. appeals to implement strong controls if they worry the United States may subsequently decide to negotiate away those same controls. Plurilateral cooperation on export controls, already strained, will become ever more difficult.
Third, an expansion of the scope of export controls could also threaten the Trump administration’s stated objective of increasing U.S. technology exports. As the government advances a wide-ranging strategy to export the U.S. AI stack, would-be foreign buyers of U.S. technology products may worry that their purchases will get caught up in future export controls, which the administration might implement at some future date to gain leverage in a trade negotiation. Similarly, U.S. tech companies may be more reluctant to invest in securing new export markets if they worry the administration may seek to extract a financial cut in return for granting a U.S. export control license.
The Path Ahead
The Trump administration has clearly signaled that it intends to incorporate export controls as part of trade negotiations. But there is less clarity on how it views export controls as part of a broader trade and national security strategy, rather than simply as a transactional point of leverage the administration can use to extract any range of concessions from foreign governments or U.S. companies.
There are steps the administration could take to better communicate and calibrate its new, broader approach to export controls while ensuring it does not inadvertently sacrifice national security priorities. This begins with articulating a strategy on the appropriate role of export controls, including clarity on what export controls are not up for negotiation. Such messaging is important for many audiences, but particularly for reengaging allies to encourage them to align their controls with those of the United States while assuring them that the only controls that will be relaxed are those on items where there is wide foreign availability. The Trump administration should also better articulate the threats posed by China’s economic, technological, and military model to reach shared risk assessments with allies and partners, to facilitate collective responses to common threats.
Additionally, if the administration wants to liberalize export controls to lower trade imbalances and as a carrot in trade negotiations, there are ways to do so without endangering U.S. national security. There are many legacy items that are controlled on the Commerce Control List, which at the time of their listing had national security implications, but which today, given advances in technologies and market shifts, may no longer warrant controls. Such items include, for example, legacy civil nuclear-related items and certain machine tools. The United States should review the Commerce Control List and identify items that have broad foreign availability, not only outside of China but inside of China and decontrol these items. This would help some U.S. companies that produce these legacy items export them to China and other markets, and allow the administration to highlight efforts to relax export controls without sacrificing national security.
Finally, the administration should review and reconsider the proposal of charging exporters to receive export licenses from the Commerce Department. If the administration does want to impose some fees for the processing of export control licenses, it should work with Congress to amend ECRA which could allow Commerce to publish a new fee structure in the regulations. Such a fee program itself need not be novel or controversial, and indeed the Department of State requires a registration fee of exporters to sell defense articles abroad. The revenue from fees could be used to improve the speed and scale of license issuance. But it is vital any such fee program be implemented in a transparent and proportionate manner, to avoid any perception that the United States is willing to sell export licenses that pose risks to U.S. national security if the price is right.
