The rule has been withdrawn from the Office of Management and Budget, effectively putting the tighter limits on hold.
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Many of those efforts have focused on Huawei , which sells global telecom equipment that American officials fear will give Beijing new channels for control and surveillance. Huawei says that its networks are secure and that it does not spy for the Chinese government.
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Tensions between the United States and China have eased since the countries concluded a Phase 1 trade deal. But the fate of Huawei, and the American companies that supply it, continues to hang in the balance. Last May, the Trump administration placed Huawei on a United States blacklist and moved to cut off shipments of certain goods, software and technology to the Chinese firm. In order to keep selling certain products to Huawei, companies had to apply for — and obtain — a special license.
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The restrictions threatened to cut off lucrative sales for a number of American tech companies that supplied components to Huawei, including Intel, Micron and Google. Some firms, eager to continue selling to Huawei, took advantage of a loophole that allowed them to sell products made outside the United States to Huawei without a government license, as long as the products contained less than 25 percent of certain types of sensitive American content.
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The proposed measure, which applies only to Huawei, would lower that threshold to 10 percent from 25 percent. It would also expand the rule so that all types of American content would count toward that 10 percent threshold. The exceptions to the existing rules have allowed Huawei to continue buying many of the components it needs to make its telecom networks and smartphones from American suppliers.
That has allowed Huawei — the third-largest purchaser of chips globally after Apple and Samsung — to continue growing and increase its revenue , defying expectations within the tech industry and in Washington.
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Some trade experts say the Trump administration should have anticipated that business with Huawei would continue, since American controls on exports are designed to target only sensitive material and technologies. But some administration officials, including Commerce Secretary Wilbur Ross, have been surprised that placing Huawei on the entity list, which designates companies that the United States considers a security or foreign policy threat, did not halt more business with the company. In an interview in Davos on Thursday, Mr. The rule, which was being considered by officials at the Commerce, Defense, Treasury, State and Energy Departments, was designed to take effect before industry had a chance to comment on it.
The Commerce Department has also been weighing a separate rule change that would expand its jurisdiction over items manufactured overseas with American technology. People familiar with the planning said that policymakers were potentially considering a far more expansive measure, but that the rule was still in the drafting stage. The proposed measures have not been made public, and their exact scope is unclear. But reports of their existence have generated panic among companies and parts of the defense industry, said current and former government officials.
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