A fresh wave of trade tension between the U.S. and China rocked Wall Street on midday Wednesday after President Donald Trump hinted at sweeping restrictions on technology exports powered by American software, sending tech stocks into a sudden tailspin.
• CRWV is taking a hit from negative sentiment. See the full breakdown here.
According to Reuters, the Trump administration is weighing a proposal that would curb a wide range of software-powered exports to China — from laptops to jet engines — in direct response to Beijing’s newly announced restrictions on rare earth exports.
The potential measure would restrict global shipments of any products that either contain U.S.-developed software or were manufactured using it.
If adopted, the policy would effectively extend Washington’s reach far beyond U.S. borders, targeting global supply chains dependent on American software tools — a category that includes semiconductors, AI processors, aerospace systems and even consumer electronics.
“Everything imaginable is made with U.S. software,” one source told Reuters, underscoring the potentially massive scope of the restrictions.
US-China Tech And Trade War: Why Is This Happening?
The consideration of this export crackdown follows Trump’s Oct. 10 post on Truth Social, in which he pledged an additional 100% tariff on Chinese exports to the U.S. and vowed to block all “critical software” exports by Nov. 1.
Trump’s post came one day after China dramatically expanded its own export controls on rare earth elements, a category of metals for which Beijing holds more than 80% of the global supply. These elements are essential to the production of everything from electric vehicles to guided missiles and high-performance computing chips.
In what appears to be a tit-for-tat escalation, the U.S. is now mulling a retaliatory move that would mirror the tech export restrictions it placed on Russia following its 2022 invasion of Ukraine.
Sources told Reuters the plan is still under discussion and may not move forward. Officials may use the announcement to increase diplomatic pressure on Beijing ahead of a scheduled meeting between Trump and Chinese President Xi Jinping in Seoul later this month.
If fully implemented, the proposed measure could deliver a serious blow to China’s tech sector by cutting off access to the software tools needed to design and produce advanced chips, sensors and digital devices.
Markets React
Markets reacted immediately. The S&P 500 fell 0.6% to below 6,700 points, while the Nasdaq 100 dropped 1.2% to 24,820.
Among the hardest hit were chipmakers and electronic design automation firms, which are tightly linked to software licensing revenues. The iShares Semiconductor ETF (NYSE:SMH) sunk 2.8% for the session.
Gold, which had plunged more than 2% earlier in the day, rebounded as investors rotated into safe-haven assets on renewed geopolitical risk.
According to Benzinga Pro data, these were the 10 most impacted stocks in the 10 minutes following the breaking news:
- Synopsys Inc. (NASDAQ:SNPS) fell 1.97% to $452.70
- Cadence Design Systems Inc. (NASDAQ:CDNS) dropped 1.54% to $329.94
- Robinhood Markets Inc. (NASDAQ:HOOD) slid 7.10% to $123.49
- ARM Holdings plc (NASDAQ:ARM) lost 2.97% to $164.36
- Alibaba Group Holdings Ltd. (NYSE:BABA) slipped 0.81% to $164.97
- Applied Materials Inc. (NASDAQ:AMAT) declined 3.34% to $218.44
- CoreWeave Inc. (NASDAQ:CRWV) was down 7.75% to $115.37
- Analog Devices Inc. (NASDAQ:ADI) fell 2.11% to $241.16
- KLA Corp. (NASDAQ:KLAC) dipped 3.28% to $1,109.75
- Micron Technology Inc. (NASDAQ:MU) lost 3.93% to $194.35
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Photo Courtesy: Matteo Benegiamo on Shutterstock
