National Security-Driven Restrictions on Cross-Border Trade and Investment: Continuity or Change in Direction with the Incoming Administration?

The Biden Administration has issued a range of national security-driven restrictions on cross-border trade and investment that focus on perceived threats emerging from China and other adversaries. These include rules governing outbound investment, bulk data collection, the information and communications technology and services supply chain, export controls, and economic sanctions.

These regulatory initiatives address a wide range of perceived national security risks, including those involving critical and emerging technology, personal data, the Russian invasion of Ukraine, the Maduro regime in Venezuela, and conflict zones in the Middle East. Many of these actions—particularly those focusing on China—are consistent with the policies of the first Trump Administration and companies operating globally should accordingly expect the second Trump Administration to build on these efforts.

Biden Administration National Security Actions

Export Controls

The Biden Administration expanded export controls on advanced computing integrated circuits, commodities containing such chips and certain semiconductor manufacturing equipment needed to produce the chips. See our prior alerts (United States Further Expands Restrictions on Exports of Advanced Computing Chips and Semiconductor Manufacturing Items to China; United States Imposes New Restrictions on Exports of Advanced Computing Chips and Semiconductor Manufacturing Items to China). These regulatory initiatives culminated in the issuance of additional controls on advanced computing chips and closed artificial intelligence (“AI”) model weights last week. See our prior alert (Biden Administration Issues More Restrictions on Advanced Chips and AI Models).

These developments built on measures put in place during the first Trump Administration, and reflect the ongoing tension between protecting U.S. national security and allowing U.S. technology companies to fully participate in the international market. This tension is particularly acute in the semiconductor sector, where U.S.-based companies are leaders in developing cutting-edge technology, but there is a strong U.S. interest in maintaining such leadership and preventing adversaries (most notably China), from accessing such advanced technologies or acquiring key tools for their development. With the slow but steady degradation of the U.S.-China geopolitical relationship, the tension between national security and the business sector will likely persist and continue to be addressed by further regulatory measures in the incoming Trump Administration. This continuity shows that on China, there is significantly greater alignment between the two parties than difference.

Economic Sanctions

The main economic sanctions developments during the Biden Administration focused on Russia (and its supporter Belarus) in response to the invasion of Ukraine, Venezuela and continued concern with the anti-democratic tactics of the Maduro regime, and the Middle East.

Russia: Sanctions targeting Russia increased significantly in response to the invasion of Ukraine. See our prior alerts (United States Further Expands Economic Sanctions and Export Controls Targeting Russia As War in Ukraine Continues; United States Issues New Economic Sanctions Targeting Russia and Sanctions Evaders, But Limited Impact Expected). The Trump team has signaled that it will have a new strategy for seeking a resolution of that conflict, although it is not clear that this will include a roll-back of U.S. sanctions. In his confirmation hearing, the Treasury Secretary-nominee Scott Bessent raised the prospect of additional sanctions on Russia.

Venezuela: The Biden Administration inherited a “maximum pressure” policy to prompt the ouster of Venezuelan President Maduro and which included significant sanctions restricting U.S. activity in Venezuela’s energy sector. The Biden Administration adopted a strategy of trading calibrated sanctions easing for fair elections that ultimately did not achieve the hoped-for outcome. It remains to be seen whether the Trump Administration returns to maximum pressure, or takes a more pragmatic approach that further U.S. economic interests in the energy sector.

Middle East: The two areas with evolving sanctions programs are Gaza and Syria. Notwithstanding differences in diplomatic strategy (a more multi-lateral approach characterizing the Biden Administration and a more direct, unilateral approach from the incoming President), there is significant alignment on the goals of the outgoing and incoming administrations, which sanctions policies will likely reflect.

Outbound Investment

The Biden Administration implemented a new outbound investment security program that prohibits and imposes notification requirements on certain types of investments by U.S. persons in Chinese companies. As explained in our prior alert (Biden Administration Implements New Outbound Investment Security Program), effective January 2, 2025, the Treasury Department’s Office of Investment Security is operating a new regulatory regime that implements President Biden’s Executive Order 14105 of August 9, 2023 – “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” (the “EO”). The EO declared a national emergency to address the threat to the United States posed by China (including Hong Kong and Macau), which seeks to “develop and exploit sensitive technologies or products critical for military, intelligence, surveillance, or cyber-enabled capabilities.” The President determined that certain U.S. investments risk exacerbating this threat.

To address the threat identified in the EO, the OISP (1) prohibits U.S. persons from engaging in certain transactions involving technologies that pose an acute national security threat to the United States, and (2) to require U.S. persons to notify Treasury of certain other transactions involving technologies that may contribute to the threat to U.S. national security. The OISP focuses on three sectors of national security technologies and products: semiconductors and microelectronics; quantum information technologies; and artificial intelligence.

Information and Communications Technology and Services Supply Chain

The Commerce Department’s Bureau of Industry and Security (“BIS”) issued final rules formally implementing a program to regulate the information and communications technology and services (“ICTS”) supply chain, and in particular to restrict the use of ICTS that is designed or developed by foreign adversaries. The ICTS Program has been operating under interim rules, and the final rules, effective February 4, 2025, set forth BIS’s procedures for investigating and addressing foreign adversary threats to U.S. ICTS.

Under the ICTS Program, in June 2024, BIS prohibited Russia-based Kaspersky Labs from selling its anti-virus and cybersecurity software in the United States. BIS has since issued rules, effective March 2025, that will prohibit transactions involving connected vehicle hardware and software designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of China and Russia, and an advanced notice of proposed rulemaking seeking input on rules to address ICTS integral to unmanned aircraft systems designed, developed, manufactured, or supplied by foreign adversaries.

The ICTS program implements President Trump’s 2021 Executive Order 13873, “Securing the Information and Communications Technology and Services Supply Chain,” reflecting continuity between the two administrations.

Bulk Sensitive Personal Data 

On December 27, 2024, the Justice Department issued final rules implementing President Biden’s Executive Order 14117 “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.” The EO determined that measures are necessary to counter threats to U.S. national security posed by efforts by countries of concern (China, Cuba, Iran, North Korea, Russia, and Venezuela), to access and exploit U.S. government-related data and bulk U.S. sensitive personal data. Specifically, such data access could be used “to engage in malicious cyber-enabled activities and malign foreign influence activities and to track and build profiles on U.S. individuals, including members of the military and other Federal employees and contractors, for illicit purposes such as blackmail and espionage,” and to bolster military capabilities. “Sensitive personal data” includes personal identifiers, geolocation data, biometric identifiers, health data, and financial data.

To address this threat, under these new rules, effective April 8, 2025, U.S. persons will be prohibited from engaging in data brokerage transactions with countries of concern that provide access to any U.S. government-related data or bulk U.S. sensitive personal data, as well as vendor, employment or investment agreements with countries of concern that provide access to bulk U.S. data generated from humans that characterizes or quantifies human biological molecules. In addition, other vendor, employment or investment agreements that provide access to various types of bulk U.S. sensitive personal data will be prohibited unless the U.S. person complies with certain mandated cyber security requirements.

The Trump Administration is expected to implement these regulations.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Greta L. Nightingale, an O’Melveny partner licensed to practice law in the District of Columbia; and David J. Ribner, an O’Melveny partner licensed to practice law in the District of Columbia and New York, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

© 2025 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, 1301 Avenue of the Americas, Suite 1700, New York, NY, 10019, T: +1 212 326 2000.