Stocks Puke On US Plan To Widen China Tech Sanctions

Tyler Durden 2025.05.30 3 min read

Update (1230ET): So much for the TACO trade…

Trump came out swinging early (as we detailed below) and has now followed up with an upper cut as Bloomberg reports, the Trump administration plans to broaden restrictions on China’s tech sector with new regulations to capture subsidiaries of companies under US curbs.

Officials are drafting a rule that would impose US government licensing requirements on transactions with companies that are majority-owned by already-sanctioned firms, according to people familiar with the matter.

The subsidiary rule — which applies a 50% ownership threshold in relation to companies on the Entity List, Military End-User list and Specially Designated Nationals list — could be unveiled as soon as June, said the people, who asked not to be named to discuss private deliberations.

The people emphasized that the contents and timing of the rule and related sanctions are not yet finalized and could still change.

After the rule is published, the US is likely to move forward with new sanctions on major Chinese companies, the people said.

So trade policy uncertainty is about to skyrocket again

The reaction in stocks was immediate… and lower…

NVDA has erased all of its post-earnings gains

* * *

Following earlier comments by TsySec Bessent that trade talks with China had “stalled”, President Trump took to social media to explain his position:

Two weeks ago China was in grave economic danger!

The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace which is, by far, number one in the World.

We went, in effect, COLD TURKEY with China, and it was devastating for them.

Many factories closed and there was, to put it mildly, “civil unrest.”

I saw what was happening and didn’t like it, for them, not for us. I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation, and I didn’t want to see that happen.

Because of this deal, everything quickly stabilized and China got back to business as usual.

Everybody was happy! That is the good news!!!

The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!