Maria Shagina
On 3 July 2025, President Donald Trump’s administration unexpectedly lifted restrictions on the sale of chip-design software to China. The reversal was a response to Beijing’s slowdown in licensing rare-earth minerals, which had disrupted a wide range of American industries – from automakers and aerospace firms to semiconductor producers and defence contractors.
When the electronic design automation (EDA) controls were introduced in late May 2025, the move was viewed as consistent with the United States’ goals to degrade China’s capabilities in artificial intelligence (AI) and semiconductors. It aligned with former president Joe Biden’s administration’s objective to maintain ‘as large a lead as possible’ and to leverage remaining chokepoints deeper in the semiconductor value chain. Western firms, such as Synopsys, Cadence, and Siemens, control approximately 80% of China’s EDA market, while Chinese domestic alternatives, like Empyrean Technology, significantly lag behind. Early signals from the administration suggested a hardening of the US export-control regime.
But just as quietly as they were introduced, the controls were lifted – again, via informal ‘is informed’ letters from the Bureau of Industry and Security (BIS). This behind-the-scenes rollback signalled a critical shift in US export-control policy: controls are no longer exclusively about national security – they are also instruments of strategic bargaining. Historically non-negotiable, export controls are now increasingly transactional.
This tit-for-tat ‘escalate-to-de-escalate’ tactic raises key strategic questions. Which export controls are non-negotiable and which can be used as leverage? How does US and Chinese strategic leverage compare? And how are chokepoints evolving?
Export controls as bargaining tools Initially, China’s rare-earth export restrictions were a response to the Trump administration’s tariffs. During trade talks in Geneva in May 2025, Beijing agreed to expedite the issuance of export licenses for critical minerals in exchange for a 90-day tariff truce. However, when Washington threatened extraterritorial measures targeting the third-party procurement of Huawei’s AI chips, China began to slow down license approvals. This prompted further retaliation from the US, including restrictions on EDA software, ethane and jet engine components.
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