View the Original .pdfAnalysis of Executive Branch Action: Continuation of National Emergency on Sensitive Technology Investments
The 1-Minute Brief
What: On August 6, 2025, the President issued a formal notice continuing a national emergency that was first declared on August 9, 2023. This emergency gives the federal government authority to prohibit or require notification for certain U.S. investments in Chinese companies involved in sensitive technologies like semiconductors, quantum computing, and artificial intelligence.
Money: There is no direct congressional appropriation. Costs are primarily regulatory for the U.S. Treasury Department and compliance-related for private sector investors. Violations can result in significant financial penalties, with a maximum civil penalty of over $368,000 per violation or twice the value of the transaction.
Your Impact: For the average American, there is no direct, immediate impact. The action primarily affects U.S. venture capital firms, private equity, and other investors who do business with specific high-tech sectors in the People's Republic of China, including Hong Kong and Macau.
Status: The national emergency, originally established by Executive Order 14105, has been formally continued for one year beyond August 9, 2025. The Treasury Department's final rules to implement the order took effect on January 2, 2025.
What's Actually in the Notice
This presidential notice is a procedural step required by law to keep an existing executive order in effect. It extends the national emergency declared in Executive Order 14105, which established a program to regulate U.S. investments going to "countries of concern" that are developing technologies critical to their military, intelligence, and cyber capabilities. The notice itself does not create new rules but ensures the authorities established in 2023 remain active.
Core Provisions:
- The national emergency is officially continued for 1 year beyond its August 9, 2025, expiration date.
- The justification remains the "unusual and extraordinary threat" posed by countries of concern (currently identified as China) that exploit U.S. investments to advance their sensitive technology sectors.
- The program targets U.S. capital and the "intangible benefits" that accompany it, such as managerial assistance, access to talent networks, and market access.
- The regulations require U.S. persons to either prohibit certain transactions in the most sensitive technology areas or notify the Treasury Department of other investments.
Stated Purpose (from the White House):
The stated purpose is to address the national security threat from countries that are working to "advance... sensitive technologies and products critical for the military, intelligence, surveillance, or cyber-enabled capabilities." The White House asserts that certain U.S. investments have been exploited to help these countries, risking America's security. The administration has described its approach as a "small yard, high fence" strategy, intended to narrowly target critical technologies rather than broadly decoupling the U.S. and Chinese economies.
Key Facts:
Affected Sectors: Technology, specifically semiconductors and microelectronics, quantum information technologies, and artificial intelligence.
Timeline: The national emergency is continued for one year. The underlying regulations have been in effect since January 2, 2025.
Scope: The provisions apply to U.S. persons (citizens, residents, and entities) and their investments in the People's Republic of China, including the Special Administrative Regions of Hong Kong and Macau.
The Backstory: How We Got Here
Era of Growing Tech Competition (2018-Present):
Concerns over China's "military-civil fusion" strategy, where the state leverages private companies to advance military goals, have been growing in Washington for years. Both the Trump and Biden administrations have used executive actions and export controls to limit China's access to U.S. technology. For years, members of Congress in both parties sought to create a system to screen outbound investments, similar to the way the Committee on Foreign Investment in the United States (CFIUS) screens inbound investments. After several legislative attempts stalled due to partisan gridlock on other issues, the White House acted unilaterally.
- August 9, 2023: President Biden signs Executive Order 14105, declaring a national emergency and directing the Treasury Department to create rules for an outbound investment screening program.
- October 28, 2024: The Treasury Department issues the final rule implementing the executive order, detailing which transactions are prohibited and which require notification.
- August 6, 2025: The President issues the notice to continue the national emergency, a requirement under the National Emergencies Act to prevent the powers from lapsing.
Why Now? The Political Calculus:
- The notice is a legally required procedural step. Under the National Emergencies Act, a declared emergency expires after one year unless the president formally renews it.
- There is a strong bipartisan consensus in Washington that the U.S. needs to prevent its capital and expertise from fueling China's military modernization. This executive action is seen as a way to address the issue while Congress remains divided on the specifics of a legislative solution.
- The administration aims to counter the threat without causing major economic disruption, though some business groups have pushed back against the restrictions.
Your Real-World Impact
The Direct Answer: This action directly affects a specific segment of the U.S. economy—namely, investment firms and corporations funding or acquiring stakes in certain Chinese tech companies.
What Could Change for You:
Potential Benefits:
- Proponents argue this protects U.S. national security by slowing the development of advanced military and surveillance technology by a strategic competitor.
- It may encourage more investment in domestic high-tech manufacturing and research to create secure supply chains.
Possible Disruptions or Costs:
Short-term (1-2 years):
- Increased compliance and due diligence costs for U.S. investment firms.
- U.S. investors may lose out on potentially lucrative opportunities in China's vast market.
Long-term:
- Could accelerate the economic and technological "decoupling" between the U.S. and China, potentially leading to bifurcated global technology standards.
- May prompt retaliatory measures from China, affecting other areas of trade.
Who's Most Affected:
Primary Groups: Venture capital firms, private equity funds, and U.S. tech companies that invest in or have joint ventures in China.
Secondary Groups: U.S. and global supply chains for electronics and AI, as well as academic and research institutions with financial ties to targeted entities.
Regional Impact: The impact is not specific to one U.S. region but is focused on industries with a global footprint.
Bottom Line: While this executive action won't affect most citizens' daily lives, it is a significant step in the government's strategy to manage economic competition with China on national security grounds.
Where the Parties Stand
Republican Position: "A Necessary Step, But More Is Needed"
Core Stance: Generally supportive of the executive order's goals but many argue the measures should be broader and more restrictive.
Their Arguments:
- ✓ Support taking action to prevent U.S. funds from aiding China's military.
- ⚠️ Express concern that the "small yard, high fence" approach leaves too many loopholes and that the list of targeted technologies is too narrow.
- ✗ Oppose what they see as a slow, overly cautious implementation that took years to develop.
Legislative Strategy: Pushing for congressional legislation, like the FIGHT China Act, to codify and potentially expand the restrictions, making them harder for a future administration to reverse.
Democratic Position: "Protecting National Security Through Smart, Targeted Action"
Core Stance: Broadly supportive of a targeted approach that protects national security without unnecessarily harming U.S. economic interests.
Their Arguments:
- ✓ Believe the executive order is a crucial tool for addressing a well-defined national security threat.
- ⚠️ Some members are concerned about potential harm to U.S. competitiveness and have engaged with industry groups to ensure the rules are not overly broad.
- ✗ Oppose a full economic decoupling from China, favoring a more tailored strategy.
Legislative Strategy: Supporting the current executive action while working on bipartisan legislation to provide permanent statutory authority for outbound investment review.
Constitutional Check
The Verdict: ✓ Constitutional
Basis of Authority:
The President's action is based on powers granted by Congress through two key laws: the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA).
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1702: "[The President may] investigate, regulate, or prohibit... any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, any property in which any foreign country or a national thereof has any interest..."
Constitutional Implications:
Commerce and Foreign Policy Power: IEEPA gives the President broad authority to regulate economic transactions to address extraordinary threats to national security originating abroad.
Precedent: The Supreme Court has historically granted the executive branch significant deference in matters of foreign policy and national security, generally upholding actions taken under IEEPA.
Federalism: This action falls squarely within the federal government's authority over foreign commerce and national security and does not intrude on powers reserved for the states.
Potential Legal Challenges:
Affected companies could challenge the rules, arguing the Treasury Department's definitions are vague or that the action exceeds the authority granted by IEEPA. However, such challenges face a high bar for success due to the broad discretion courts have afforded the President in this area.
Your Action Options
TO SUPPORT THIS ACTION
5-Minute Actions:
- Contact the White House: Use the White House comment line or website to express support for the continuation of Executive Order 14105.
- Call Your Rep/Senators: (Capitol Switchboard: (202) 224-3121) "I'm a constituent from [Your City/Town] and I support strong action to prevent U.S. investments from funding the military technology of our adversaries. I urge [Rep./Sen. Name] to support the goals of Executive Order 14105."
30-Minute Deep Dive:
- Write to the Treasury Department: The Office of Investment Security at the Treasury Department is responsible for implementing the rules. A detailed letter can express support for robust enforcement.
- Join an Organization: Groups focused on national security and a hawkish stance on China policy actively support these measures.
TO OPPOSE THIS ACTION
5-Minute Actions:
- Contact the White House: Express your concern that the order may harm U.S. economic interests or lead to unnecessary conflict.
- Call Your Rep/Senators: (Capitol Switchboard: (202) 224-3121) "I'm a constituent from [Your City/Town] and I am concerned that Executive Order 14105 will hurt American investors and companies. I urge [Rep./Sen. Name] to push for a more balanced approach."
30-Minute Deep Dive:
- Write a Letter to the Editor: Explain how you believe these restrictions could negatively impact the U.S. economy or international relations.
- Join an Organization: Many business and trade associations, as well as some free-market think tanks, have raised concerns about the economic impact of these rules.