The Trump administration is cracking down on American investments in China’s AI, military tech, and life sciences sectors. The US Treasury just unveiled regulations under the Comprehensive Outbound Investment National Security Act, which Congress approved in 2025 to tighten checks on investments in China, Russia, Iran, and other ‘countries of concern.’
For some time now, US officials have sought to block rival nations from the financial backing needed to upgrade their armed forces. Much like Trump’s recent policy move, former President Joe Biden had also issued an executive order limiting US capital flowing into China’s AI, semiconductor, and quantum computing sectors. Afterward, the Treasury launched the Outbound Investment Security Program.
The Treasury will still have to hear public feedback before finalizing regulations
For now, the Treasury’s proposed rules target investments in advanced semiconductors, artificial intelligence, selected biotech-related materials and compounds, and technologies such as brain-computer interfaces. They also apply only to investments exceeding $50,000.
Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, noted that with these rules, Washington is signaling to global markets that it keeps tabs on American capital flows and the specific advancements they support. He noted that the added scrutiny reflects an understanding that cash injections can boost military power just as much as a tech transfer can.
“Biotech matters to both Wall Street and Main Street. It shapes the future of medicines and therapeutics, but some of the same technologies can also strengthen China’s military capabilities or deepen US dependence on Chinese supply chains,” he asserted.
The Treasury will review public feedback on the proposal before finalizing the regulations.
Treasury Scott Bessent anticipates that, once finalized, the regulations would reinforce the existing Outbound Investment Security Program and limit adversaries’ ability to use US capital to develop critical technologies that endanger national security. He added that the rules would foster an ‘open investment environment’.
Similarly, former US trade official Ryan Majerus, now a partner at the King & Spalding law firm, contended, “It’s just the first step in a fairly long process to get to changes which presumably will be more enforcement-minded, to put more teeth behind the outbound investment program.”
US investors face greater scrutiny when funding sensitive technologies
The proposal could also influence how American investors evaluate opportunities in Chinese technology. In the case of deals involving artificial intelligence, advanced computing, or biotechnology, firms might need to conduct more due diligence to ensure their investments comply with Treasury’s rules. That could raise compliance costs and make some transactions take longer.
For Washington, the goal is to limit access to American funds that could be used in developing technologies with military applications.
But there will be a sense that the exact outcome will be determined by the final regulations as to the scope, reporting requirements, and enforcement process. Investors will be closely watching the Treasury’s review process to gauge how the restrictions will work if transactions are subject to specific conditions.
The Treasury Department fined Amidi LLC for violations of OISP rules
Earlier this July, the Treasury Department levied a $200,000 penalty against an American company after one of its subsidiaries failed to report its $92,500 in backing for a Chinese AI and robotics firm.
Amidi LLC did not disclose its 2025 investment in Shanghai Qiongche Intelligent Technology Co., (Noematrix), a Chinese technology company working in artificial intelligence, robotics, and embodied intelligence.
At the time, Assistant Secretary of the Treasury for Investment Security Christopher Pilkerton contended that the OISP was preventing rival nations from using American money to develop dangerous technologies.
In a more recent disclosure, the Treasury stated that Bank of America failed to file reports on upwards of $5 billion in suspicious transactions with the Financial Crimes Enforcement Network.
A portion of these transactions was tied to Chinese laundering networks active along the US-Mexico border, and the bank was further accused of breaching global sanctions programs linked to Iran, Russia, terrorism, and drugs.
Overall, since Trump first took office, the US and China have been locked in a prolonged battle for economic and technological influence. Both sides have limited exports of critical materials and technologies, with China restricting rare earth minerals and the US controlling exports of advanced chips.
They have also introduced tariffs on each other’s products. Currently, both sides have agreed to slash or eliminate duties on $60 billion in products, with an even $30 billion split between American exports to China and Chinese exports to the United States.
The cuts offer relief across a range of merchandise, including fishing tackle, live horses, and camels. The Chinese Commerce Ministry even stated that around 90% of goods on both ledgers will slide back to variable most-favored-nation baseline rates.
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