Those decisions have not previously been reported. They are the latest moves by the Trump administration to rein in US government actions that could antagonise Beijing following a trade truce reached by China’s Xi Jinping and US President Donald Trump in October, the sources said.
Read more: AI spending to support 2.8% US growth, two Fed rate cuts likely in 2026: BofA economistThat meeting also included a pledge by the Chinese to delay painful export restrictions on the rare-earth minerals that underpin tech manufacturing globally.
The Commerce Department defended its actions, saying it is actively using its authorities to “address national security risks from foreign technology, and we will continue to do so.”
While the administration’s actions are likely aimed at helping to defuse trade tensions related to Trump’s costly trade war, some critics say they also leave US data centres and other technology vulnerable to Chinese threats as data centre construction surges to meet exploding demand for AI.
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“At a moment when we are desperately trying to remove ourselves from Beijing’s leverage over rare-earth supply chains, it is ironic that we’re actually letting Beijing acquire new areas of leverage over the U.S. economy – in telecoms infrastructure, in data centers and AI, and EVs,” said Matt Pottinger, who served as deputy national security advisor during Trump’s first term.
The Chinese Embassy said Beijing opposes “turning trade and technological issues into political weapons” while welcoming US cooperation with China that could make 2026 “a year where our two major countries advance toward mutual respect, peaceful coexistence, and win-win cooperation.”
TP-Link Systems Inc., a California-based company that was spun off from a Chinese firm in 2024, emphasised that it is an independently owned American company, “with U.S.-managed software, U.S.-hosted data, and security practices that meet US industry standards.”
“Any suggestion that we are subject to foreign control or pose a national security risk is categorically false,” it added.
The White House and Chinese state-owned telecom giants China Telecom, China Mobile and China Unicom did not respond to requests for comment about the measures and why they are on hold. Trump plans to visit Beijing in April, and has invited Xi to visit the U.S. later in the year.
Some Democratic lawmakers objected to the shelving of the measures.
“You can’t claim to be ‘tough on China’ and let the Chinese Communist Party flood their technology into critical infrastructure and companies across America – from the auto industry to telecommunications,” U.S. Senate Minority Leader Chuck Schumer said in a statement. “In his rush to please Chairman Xi, Trump is selling out our national security, industry, and risking the private personal data for millions of Americans,” he added.
All the measures that the administration has now paused were initially aimed at keeping Beijing from accessing and exploiting sensitive American data for blackmail or intellectual property theft and positioning itself deep within internet-connected systems to sabotage critical infrastructure, two of the sources said.
Throughout much of last year, Commerce Undersecretary Jeffrey Kessler dragged his heels on advancing the measures, citing the need to get buy-in from the White House and Commerce Secretary Howard Lutnick, two of the people said. The Commerce Department and Kessler did not respond to requests for comment on this description.
But after the October trade truce, leadership instructed staffers in the office charged with policing foreign tech threats to “focus on Iran and Russia,” two of the sources said. Iran is not viewed as a tech threat on par with China or Russia. Commerce did not comment on questions about its shift in focus.
Last month, the Commerce Department ousted the woman charged with leading the office. She will be replaced by Katelyn Christ, a political appointee with experience at the office, two sources said. Christ could potentially revive some of the measures if relations with China sour following the April summit between Trump and Xi, one of them added. Christ and Commerce did not comment.
But some China hawks say such measures cannot wait. U.S. data center capacity is expected to grow by nearly 120% by 2030, according to global real estate firm Jones Lang LaSalle.
David Feith, who served in Trump’s first and second administrations, described Chinese-linked data centre hardware as a growing national security threat and urged action to address it.
American data centres could become “remotely controlled islands of Chinese digital sovereignty,” as the US quietly builds “strategic vulnerabilities into our AI and energy backbone,” he said.
Wendy Cutler, a former acting deputy U.S. trade representative, now with the Asia Society Policy Institute, said it stands to reason that the administration would shelve punitive tech measures as it seeks “stabilisation” with China.
“The Chinese have made it very clear that stabilisation in their mind means no more export controls and other restrictive tech measures…, so particularly in the lead-up to the April visit to China, I would not expect the issuance of more… controls,” she said, emphasising China’s potent threat of fresh curbs on rare-earth mineral exports.
“Not only does it have leverage, it is willing to use it. It ties the president’s hands,” she added.
TP-Link contacted the Commerce Department last year with suggestions for ways it could address national security concerns, two sources said, clearing the path for a less restrictive regulation of its U.S. router sales.
In response to Reuters’ questions about the measure targeting its technology, the company said its routers are not uniquely targeted for cyberattacks and that its code has been rigorously tested by U.S.-based experts to prevent the use of covert methods to bypass security controls. The company also said it has “fully cooperated with the Commerce Department” and does not comment on the “specifics of a government investigation.”
