The United States and the West are likely to continue tightening export controls on China's semiconductor and other high-tech industries to close loopholes exploited by Chinese companies. A return to the White House by former President Donald Trump, however, could jeopardize trans-Atlantic cooperation on this issue. On Sept. 5, the U.S. Department of Commerce announced new export controls on quantum computers and technologies underpinning them, advanced semiconductor transistor technology, advanced semiconductor manufacturing equipment and additive manufacturing technologies to China and other rival countries. The department stated that the new export controls align U.S. regulations with those already introduced by like-minded nations and that Washington anticipates more Western countries will follow suit. Separately, the Dutch Foreign Trade Ministry announced Sept. 6 that it would expand export controls on semiconductor manufacturing equipment that would require Dutch lithography machine company ASML — which has a global monopoly on some of the most advanced machines — to seek export licenses from the Dutch government rather than the U.S. government. The Dutch government's announcement comes after an Aug. 29 Bloomberg report indicating that it is unlikely to renew licenses for ASML to service and supply spare parts for advanced lithography machines in China once they expire at the end of 2024.

• The new U.S. export controls cover the export of equipment used to produce gate-all-around field-effect transistor technology. The technology is an advanced transistor structure on a chip that semiconductor companies are using or planning to use for next-generation chips, going beyond the fin field-effect transistor that has been used in high end chips for the last decade. This builds on existing U.S. restrictions on the export of FinFET technology to Chinese entities that can be used to produce advanced logic chips. 
• The U.S. export controls also include licensing requirements for deemed exports — e.g., the sharing of the controlled technology with a foreign person on U.S. soil — for quantum technology and software, which will create a more complicated and compliance-heavy environment for researchers working with Chinese nationals in the United States in quantum computing research and development. 
• The new Dutch restrictions will require ASML to apply for export licenses from the Dutch government rather than the United States for shipments of its TWINSCAN NXT:1970i and 1980i deep ultraviolet immersion lithography machines. ASML's more advanced deep ultraviolet immersion lithography machines are already subject to Dutch government approval, as are their extreme ultraviolet lithography machines. In response to the Dutch government's announcement, ASML described the new requirements as a "technical change" that is not expected to have "any impact" on its financial outlook for this year or long-term scenarios. 
• Although unrelated to export controls, the Biden administration is also likely to announce a new rule restricting the use of Chinese software and other related technology in connected vehicles in the United States. 

The new restrictions are designed to close loopholes in existing Western export controls that China has been exploiting to develop more advanced chips and to limit China's ability to remain at the forefront of quantum computing and metal additive manufacturing technologies. Since the United States first placed expansive export controls on chipmaking technologies to China in October 2022, the Biden administration has updated these regularly in order to try to close loopholes and prevent China from bypassing restrictions on its ability to manufacture advanced chips. Officially, the United States and its allies are curbing semiconductor manufacturing technology exports to China to prevent the Chinese military and intelligence apparatus from gaining more advanced semiconductor equipment that would help close the technological gap between the Chinese military and the United States and its allies' militaries. But many Western leaders also view the export controls as a method of ensuring that non-Chinese companies dominate the commercial field for advanced chips, thereby shielding them from Chinese competition. Chinese companies have made progress in producing more advanced chips, using less sophisticated deep ultraviolet immersion lithography machines to manufacture chips that surpass those made by non-Chinese firms — a key reason why the United States has pressured the Dutch government to impose more export controls on ASML's 1970i and 1980i deep ultraviolet immersion lithography machines and withdraw maintenance support for those in China. By targeting gate-all-around field-effect transistor technology, the United States also hopes to ensure that China will be unable to leapfrog ahead and build advanced chips using newer transistor architectures. The United States has long planned to place restrictions on quantum computing technologies, which have the potential for a number of different military and intelligence-related applications, including weapons and space simulations and cracking existing RSA encryption technologies with relative ease. 

• Western export controls are significantly impacting China's ability to produce advanced chips. While China's Semiconductor Manufacturing International Corporation has been able to produce advanced chips for Huawei using 5 nm and 7 nm processes with older lithography machines, the yield rate for manufacturing them is reportedly about 50% and 30%-40%, respectively, compared to rates around 40 percentage points higher for TSMC's advanced chips. This makes them costly and timely to produce, thus limiting China's ability to deliver them at scale throughout the military and in commercial applications. The lack of more advanced machines makes it even less likely that SMIC will be able to keep up with more advanced processes beyond its 5 nm process at a large scale. In May, the Semiconductor Industry Association estimated that China will only produce around 2% of the world's advanced chips below the 10 nm node level in 2032. 
• While quantum computing technologies are still years from mainstream adoption, the United States hopes that its export controls will keep China's development lagging the rest of the world. 
• Although additive manufacturing technologies have not completely revolutionized supply chains, they are becoming increasingly important for the aerospace and defense sectors, helping to produce lower cost engines, rockets and other various components. The U.S. export controls specifically target additive manufacturing technologies that can produce metal or metal alloy components, which is a type of additive manufacturing technology frequently used in military and defense, as well as industrial applications. 

The Dutch government's acquiescence to U.S. pressure shows that there is growing trans-Atlantic alignment on the need for robust export controls targeting China, but coordination could be jeopardized if relations between Washington and European governments falter during a second Trump administration. The Biden administration has lobbied heavily for European and Asian countries, including Japan and South Korea, to impose additional restrictions on China's technology sector. Japan has also introduced new export controls on materials and equipment needed for advanced chip production. The United States has seen some success in aligning these countries on export controls for semiconductor manufacturing equipment and quantum computing technologies, as well as placing restrictions on the use of Chinese 5G equipment. For the United States, multilateral cooperation is essential in slowing the creation of new loopholes by Chinese and Western companies still attempting to export sensitive technologies to China and in swiftly closing existing ones. Moreover, it provides the United States with stronger diplomatic leverage, allowing it to assert that its export controls are not solely Washington's but rather are supported internationally and reflect a broader consensus of the risks posed by China. If Vice President Kamala Harris wins the U.S. presidential election, trans-Atlantic cooperation on technology restrictions will likely continue with little change once she takes office. A Trump win, by contrast, would likely see U.S. relations with the European Union and European countries sour over a multitude of issues, such as a possible U.S.-EU trade war, reduced U.S. commitment to NATO obligations and reduced support for Ukraine against Russia. To most European leaders, these issues are far more important than curbing China's rise as a military peer since China does not represent the same strategic threat to Europe — a collection of Atlantic countries — as it does to the United States — a Pacific and Atlantic country. This means that European cooperation over export controls will likely become a casualty of any fallout in relations with the United States. Trump's personal focus on curbing the U.S. trade imbalance with China could result in a second Trump administration prioritizing trade issues over technology restrictions, potentially slowing the introduction of new controls — an area that was not a primary focus during his first term. Despite Trump's focus on China, many Republicans and likely those in any second Cabinet would push Trump to continue the Biden administration's approach in placing sectorwide restrictions on emerging and critical technology exports to China — meaning some restrictions would remain likely. Poor relations between the United States and European governments leading to European governments not following suit could, however, force the Trump administration to use the Foreign Direct Product Rule more aggressively. This would effectively force U.S. export controls on European companies if there is any level of U.S. technology in their products. Using the Foreign Direct Product Rule would be a blunt force way to cut off European technology exports to China and add yet another point of tension between the United States and affected European countries weakening trans-Atlantic cooperation on restricting China's access to advanced technologies.