The US government is once again intensifying its suppression of Chinese tech enterprises, planning to expand export restrictions on subsidiaries of sanctioned companies. After the news broke, Bitcoin dropped sharply by over 1.7% early this morning, market sentiment turned conservative, and while US stocks initially fell, they largely recovered by close, with the semiconductor index plummeting over 2%.
Expanding Sanctions Scope, US Aims to Counter Chinese Subsidiaries' Evasion Strategies
Bloomberg, citing sources, reported that the Trump administration is drafting new regulations to include subsidiaries with over 50% ownership of Chinese companies already listed on the Entity List, Military End-User List, and Specially Designated Nationals List in export control, requiring US government approval for future transactions with US companies.
This policy aims to prevent Chinese companies from evading sanctions by establishing new subsidiaries. US officials describe this phenomenon as "whack-a-mole," where a company is sanctioned, and immediately another subsidiary emerges to continue operations, significantly reducing regulatory effectiveness. This new rule can be seen as a response and patch to this issue.
Sources indicate that the new regulations could be announced as early as June, with potential new sanctions against major Chinese companies like CXMT and SMIC.
Trump Criticizes China for Violating Agreement Again
This new sanctions news comes amid renewed tensions between the US and China. US President Trump publicly accused China of "completely violating" the preliminary agreement reached in Geneva negotiations and threatened to take corresponding actions. Although he later expressed hope to resolve disputes through dialogue with Chinese President Xi Jinping, the market has already reflected concerns about escalating US-China conflicts.
Additionally, China's recent export restrictions on critical minerals have provoked a backlash in Washington, with US-China tech confrontations intensifying, and blockades and countermeasures becoming the new norm.
Bitcoin Drops Below $104,000
After the news was released, the crypto market showed a clear reaction. Bitcoin (BTC) sharply dropped 1.76% early this morning, reaching as low as $103,550, with a 24-hour decline of 1.73%, reflecting the market's high alert to escalating US-China tech conflicts.
Ethereum approached $2,500, declining 3.65% in the past 24 hours.
US Semiconductor Index Plummets Over 2%
US stocks were briefly impacted during trading but ultimately recovered most losses. The Dow Jones Industrial Average rose 54.34 points (+0.13%) to close at 42,270.07, S&P 500 slightly dropped 0.01%, and Nasdaq fell 0.32%.
However, stocks closely related to semiconductors were heavily hit, with the Philadelphia Semiconductor Index plummeting 2.11% to 4,758.06, and TSMC ADR dropping 2.09% to close at $193.03. The market is concerned about the new sanctions' impact on supply chains and cross-border operations.
Sanctions Upgrade Signal Intensifies
If the new regulations are successfully implemented, they will set higher compliance thresholds for Chinese companies, further concretizing the US-China tech decoupling. As a highly volatile asset, Bitcoin cannot remain unaffected by such policy risks, and the medium-term challenges faced by US semiconductor companies will also intensify.
Although the Trump administration has not yet officially announced the final details, the market already views this as a precursor to comprehensive sanctions on China's semiconductor industry chain, affecting not only the stock market but also overall asset risk appetite.
