U.S. Treasury Proposes Rule to Curb Tech Investments in Adversarial Nations

The U.S. Treasury Department has put forth a proposed rule designed to restrict American investments in sensitive high-tech sectors within China, Russia, North Korea, and other nations deemed adversarial. This move signals a continued effort by the U.S. government to prevent adversaries from leveraging American capital to advance their military capabilities.

The initiative builds upon an executive order signed in 2023 by President Joe Biden, which initially placed restrictions on outbound U.S. investments in specific Chinese sectors, including semiconductors, quantum computing, and artificial intelligence. The Treasury later formalized this through the Outbound Investment Security Program.

A law passed by Congress in December 2025 codified and expanded these restrictions, targeting a broader range of technologies and including additional countries such as Cuba, Iran, North Korea, and Russia. The inclusion of Russia in the proposed rule comes shortly after President Donald Trump waived sanctions on Russia following a diesel deal with President Vladimir Putin.

Expanded Restrictions and Covered Technologies

The newly proposed rule would extend restrictions to cover investments in hypersonic systems, supercomputing, biotechnology, and artificial intelligence, which the Treasury referred to using Trump's term, "superintelligence" or SI. Experts suggest that the rule communicates to markets that Washington is monitoring the flow of U.S. capital and the development of capabilities it helps to build.

"The screening of outbound investments recognizes that capital can accelerate military-relevant capabilities just as surely as technology transfer can," stated Craig Singleton, a senior fellow at the Foundation for Defense of Democracies. Jason Chipman, a partner at the law firm WilmerHale, noted that the rule "will require more substantial compliance programs to manage risk."

The proposed rule, intended to implement the Comprehensive Outbound Investment National Security Act of 2025, would apply to investments exceeding $50,000. It is expected to exclude many financial investments, such as stock purchases.

A Prolonged Tech Rivalry

The U.S. and China, the world's two largest economies, have been engaged in a prolonged economic and technological rivalry since the Trump administration. This competition has involved restrictions on the export of critical technologies and products, including China's rare earth minerals and America's advanced computer chips, as well as reciprocal tariffs.

While former President Trump and Chinese President Xi Jinping agreed to ease tensions and engage in talks, a temporary truce that was extended into January, the underlying competition persists. In July, the Treasury Department fined a U.S.-based company $200,000 for failing to report a $92,500 investment in a Chinese artificial intelligence and robotics firm through a subsidiary.

The Treasury will accept public comments on the proposal before issuing a final rule. Ryan Majerus, a former U.S. trade official, described the proposal as "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."