US Uses 'Poison Pills' To Isolate China From Supply Chains

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The Telegraph said that under the agreement, the current Labor government in the UK allows the US to veto Chinese investment in the UK's steel and drug sectors.

In 2018, the US Commerce Department's Bureau of Industry and Security (BIS) initiated Section 232 investigations into the effects of steel and aluminum imports on US national security. It added the so-called“poison pill” clause in the US-Mexico-Canada Agreement (USMCA) to limit China's access to the steel and aluminum markets in North America and potentially influence its economic relationship with Canada and Mexico.

In March and April 2025, the BIS launched new Section 232 investigations on imports of copper, timber and lumber, semiconductors and chip-making equipment, medicines and their ingredients, trucks, and processed critical minerals and derivative products.

“This type of 'poison pill' clause is actually worse than the tariffs,” Zhang Yansheng, a senior researcher at the China Academy of Macroeconomic Research, told the Financial Times.

Zhang said the US-UK trade deal showed Washington's attempt to isolate China by forcing other countries to accept similar terms in trade negotiations. He said China should“bluntly raise the issue in talks with the UK,” but at this point, it should hold off from immediate retaliation.

“China is seriously concerned about the media reports and has made representations to the UK, asking for clarification,” a spokesperson of the Chinese Embassy in the UK said in a statement on Wednesday.“Cooperation between countries should not target or harm the interests of any third party. China is firmly opposed to any party seeking a deal at the expense of China's interests.”

The Chinese Embassy said it will continue to follow the situation and respond as necessary.

A Shandong-based columnist said the UK's getting a tariff-free export quota of 100,000 cars to the US annually is not worth sacrificing the opportunity to collaborate with China in the chip and pharmaceutical sectors.

Rescinding the AI diffusion rule

On January 15, the Biden administration announced the AI diffusion rule, a new regulatory framework to ensure the responsible diffusion of advanced AI technology.

The framework requires US companies, mainly Nvidia and AMD, to apply for export licenses if they ship high-end AI chips to foreign countries other than 18 US allies. Its compliance requirements were set to take effect on May 15.

However, the US Commerce Department said Tuesday that the BIS will not enforce the AI diffusion rule.

“These new requirements would have stifled American innovation and saddled companies with burdensome new regulatory requirements,” the department said.“The AI diffusion rule also would have undermined US diplomatic relations with dozens of countries by downgrading them to second-tier status.”

At the same time, the BIS announced three actions to strengthen export controls for overseas AI chips:

• Alerting the industry to the risks of using PRC advanced computing ICs, including specific Huawei Ascend chips;
• Warning the public about the potential consequences of allowing US AI chips to be used for training Chinese AI models; and
• Urging US companies to protect supply chains against diversion tactics (China's tactics to obtain AI chips via third countries).

Also on Tuesday, Trump led a group of technology gurus, including Nvidia's Jensen Huang and AMD's Lisa Su, on a visit to the Middle East. Nvidia said it plans to ship 18,000 Blackwell chips to Saudi Arabia.

“Why did the US take action against Huawei's Ascend AI chip?,” a Shaanxi-based columnist asks .“The Ascend 910C chip is comparable to some of Nvidia's chips. It won't be long before it can compete with Nvidia.”

She says Washington's action to suppress the Ascend chip in the global market is meaningless, as the chip now targets mainly domestic customers. She says China will continue to ban the exports of its critical minerals to the US.