Next Trump Admin Could Pursue ‘Novel’ Trade Restrictions, Former BIS Official Says

Nikakhtar, who served under President Donald Trump, said during a Wiley webinar last week that she believes a second Trump administration would be willing to wield “the stick approach if we need to defend our interests.” That could include greater use of export controls to regulate data transfers in addition to the software that collects that information. It also might include “more interesting and novel uses of sanctions capabilities.”

The Biden administration has imposed a range of China-related sanctions and technology controls over the last three years -- especially for advanced chips and chip equipment. But Nikakhtar suggested a new Trump administration could go further.

“I think we're going to see more IEEPA action,” said Nikakhtar, referencing the International Emergency Economic Powers Act, which authorizes various U.S. sanctions and trade restrictions.

Nikakhtar said a Republican executive branch may be “more willing to issue regulations that limit high-risk transactions with China” as the U.S. becomes increasingly mistrustful of the business environment the Chinese government has created for foreign companies, including its anti-foreign sanctions law, which blocks companies from complying with certain foreign sanctions regulations (see 2309270039 and 2310230032).

“I think it's going to be increasingly difficult for companies to be able to at least justify transactions in China, given this growing understanding of mistrust,” she said.

While a second Trump administration would have “a great desire to relax regulations with allies,” it would “really heighten a wall in terms of prohibiting transactions broadly with foreign adversaries,” including China, Nikakhtar said. Trump 2.0, however, would not be "shy" about "going after" European allies that mistreat U.S. firms.

Greta Peisch, a Wiley partner who served as general counsel at the Office of the U.S. Trade Representative during the Biden administration, said the Biden administration has taken a "pause" on negotiating trade agreements and issuing digital trade policies, an approach she believes would not be sustainable in a Harris administration. She expects that a Harris administration would seek to strike a balance between opening markets and addressing concerns about artificial intelligence, privacy and other issues.

Peisch credited the Biden administration with working with allies to achieve joint action on China. That effort is time-consuming but is essential not only to increase the effectiveness of measures but also to ensure U.S. companies are not put at a competitive disadvantage, she asserted.

“I think when you talk about China, one issue that reemerges time and again is how to make those tools effective,” she said, adding that efficacy is commonly debated around current U.S. export controls on chip exports. Some technology policy observers say the controls are hurting American toolmakers more than they’re slowing Chinese semiconductor innovation (see 2408090033).

Nikakhtar expects the U.S. government will make "missteps" as it tries to figure out how to regulate new technology. "It is so important for companies to better educate the government because the government really doesn't have too many experts in this space and they will be tempted to overregulate just to prevent bad things from happening," she said.

Peisch said there is “a lot of bipartisan agreement on China policy and what the problem is and even what the means should be to solve those problems.” A continuing issue is “how to make those tools effective,” she said. “We don’t want to just slow down business and then not have that policy outcome that we want as well.”