Biden To Let Trump-Era Rule Severely Regulating China Tech “Threats” Take Effect

In a move that China state media has ironically enough said is part of broader White House policy that “smacks of Trumpism” – and which is also unpopular with American businesses, Biden will move forward with a rule that will allow the Commerce Department to ban tech-related business on US soil deemed to “pose a national security threat”.

It appears yet more confirmation that Trump’s prior efforts to “box-in” Biden on China are proving effective. The rule proposed under the Trump White House as late as January, and based on a prior Trump-issued executive order from 2019, might not be enforced as “aggressively” – officials quoted in The Wall Street Journal seek to assure, however, it’s also said that Biden doesn’t want to appear “soft” on China in nixing it.

Specifically, “Administration officials are concerned that blocking or diluting the rule would send the wrong message about the new administration’s approach to China, potentially fueling criticism that it is taking a weaker approach, according to the people,” WSJ writes.

It comes after a series of Biden national security cabinet picks have in recent weeks been pressed in confirmation hearings over whether they’d be “tough” on China. Despite this, it remains hugely controversial and deeply undesired among US businesses and industries, given at the very least the confusion and lack of compliance guidance that can be expected out of Washington.

Addressing the feared deep and lasting negative impact on the US economy itself, WSJ explains:

The rule could affect millions of American businesses, according to a Commerce Department estimate, potentially requiring them to get government clearance for purchases and deals involving sophisticated technology with what the regulation calls a “foreign adversary,” or face potential unwinding of the deals or other enforcement.

Everything from sophisticated electronics, most especially computer components and iPhones, to camera equipment to vehicles, could potentially be impacted by a web of confusing regulations that could ensue. 

Leading the charge against implementing the rule includes IBM, which was quoted in Bloomberg as saying, “By the Commerce Department’s own estimate, this rule would impose many billions of dollars in new compliance costs on millions of U.S. firms, including countless small businesses.” 

As indicated in the quote by IBM Regulatory Affairs Vice President Christopher Padilla, it’s simply Biden carrying a Trump policy on “autopilot”: “Such a massive, overbroad, and economically damaging Trump-administration rule should not be on autopilot,” he said. It goes without saying that small businesses are still being battered by the COVID-impacted economy, which means Biden’s move will further be seen as hitting them while they’re still down – perhaps all in the name of not being “soft” on China.