U.S. Set to Expand Tech Restrictions on China, Sending Chip Stocks Lower

The U.S. is preparing to impose further restrictions on Chinese technology companies included in the Entity List by targeting the subsidiaries owned by them, per Bloomberg. The Entity List contains foreign companies that are considered a threat to the U.S.’ national security and are subject to export controls and additional licensing requirements. Several Chinese technology firms are on the list, such as Huawei and DJI.

U.S. Considers Additional Sanctions on Chinese Companies

The subsidiary restrictions could be enacted as early as June and will count companies that have at least a 50% ownership status by Entity List companies as subsidiaries, according to people familiar with the matter. The sources added that additional sanctions on Chinese companies could follow.

The news will likely further strain the stock market and U.S.-China trade discussions. The S&P 500 (SPX) is slightly down on a year-to-date basis while foreign peers outpace its returns. Major companies within the U.S. and China rely on each other for business and technology as the rift appears to widen even more.