U.S. Bars Foreign Access to New Anthropic Model as Taiwan Defense Disputes Spill Into Washington
Washington widens its China-risk crackdown across supply chains, tech, trade, and Taiwan defense.
LAUREN PENG, HOST:
Welcome back to China & The Hill, your essential weekly update on the U.S.-China news and policy debates unfolding in Washington, D.C. and beyond.
It’s Tuesday, Jun 16th and today we’re covering derisking measures from Congress, a SCOTUS tariff ruling, the Pentagon’s defensive measures against Chinese firms, and more.
Let’s get into it.
🏛️ Congress Pushes Widened Derisking Measures
Lawmakers take aim at China exposure.
Starting on Capitol Hill, Congressional activity on China this week centered on supply-chain chokepoints and foreign-adversary exposure across critical industries. Select Committee on China Chairman John Moolenaar (R-MI) and Ranking Member Ro Khanna (D-CA) introduced the Magnets Value Chain Support Act, which would create tax credits for U.S. magnet production. The bill also includes a demand-side credit for U.S. motor manufacturers that buy qualifying U.S.-produced permanent magnets and requires manufacturers claiming credits to keep part of their annual capacity available for defense orders.
Rep. Moolenaar also joined Rep. Debbie Dingell (D-MI) in introducing the Biotech Investment National Security (BINSA) Act, which would add biotechnology to the sectors covered by outbound investment review under the COINS Act. The bill would subject U.S. pharmaceutical licensing deals, joint ventures, and equity investments involving Chinese covered foreign persons to Treasury review, including deals involving technology and intellectual property. It would also direct the Defense Department to assess whether U.S. capital flows into Chinese biotechnology affect national security and military readiness.
Lawmakers also targeted perceived risks in defense contracting policies and China-linked technologies and Moolenaar, Rep. Jay Obernolte (R-CA), and Rep. Jennifer McClellan (D-VA) introduced the GUARD Act, which would require national security scrutiny of robots made by China and other foreign adversaries and prohibit imports of robots determined to pose a national security threat. In the Senate, Sen. Elissa Slotkin (D-MI) introduced the Protecting America from Chinese Cars Act, which would prohibit vehicles from entering the United States if they are made or designed in China or another covered country, or if the manufacturer is more than 15 percent owned or controlled by covered-country entities. Meanwhile, Sen. Joni Ernst (R-IA) introduced the Ending Double Dealing Act, which would restrict Defense Department contracts, grants, and other agreements with consultancies tied to covered foreign entities and require bidders for DOD consulting work to disclose recent contracts, grants, or financial awards from those entities. The bills would extend China-focused screening and procurement restrictions into industrial inputs, life sciences transactions, vehicle imports, and Pentagon contracting.
💡 Trump Admin Orders Usage Restrictions on Anthropic Products
U.S. restrictions hit Anthropic’s latest AI models.
Senior Anthropic staffers met with Trump administration officials Monday after the U.S. government ordered the company to suspend foreign national access to its latest AI models, Fable 5 and Mythos 5. The directive, which cited national security concerns, applied to foreign nationals inside and outside the United States, including foreign national Anthropic employees. Anthropic disabled the models for all customers to ensure compliance.
Source: Bloomberg Technology
Anthropic says the government has not provided detailed evidence of national security concerns and believes the order stems from a potential workaround for Fable 5’s cybersecurity guardrails. The administrative action affects software that banks, law firms, government offices, and other institutional users have been rapidly adopting, and has raised concerns among U.S. allies and European officials about their reliance on American AI systems subject to U.S. government intervention. Anthropic says it had worked with U.S. government agencies, the UK AI Safety Institute, outside organizations, and internal teams to “red team” the models before launch and argued that the reported vulnerability involved capabilities already available through other public models. Anthropic is complying with the directive but says it is working to restore access as soon as possible.
⛏️ Facing Chinese Mineral Controls, Congress Passes DOMINANCE Act
Critical minerals remain high on Washington’s China agenda.
The House passed the bipartisan DOMINANCE Act this week, keeping critical mineral supply chains at the top of Congress’ agenda. Introduced by Reps. Ami Bera (D-CA) and Young Kim (R-CA), the measure seeks to reduce U.S. reliance on Chinese supply chains by expanding mineral and energy investments with allies and partners, strengthening U.S. energy diplomacy, and building workforce expertise around secure supply chains. The bill drew support from groups spanning the national security, technology, and energy sectors.
The vote comes as U.S. companies continue reporting difficulty sourcing critical minerals from China despite earlier tariff and trade talks between Washington and Beijing. The U.S.-China Business Council said some rare earth elements remain “nearly unobtainable,” with China’s export controls and licensing delays pushing many companies to seek alternative suppliers. Materials proving particularly difficult to access include samarium cobalt magnets, yttrium, and cadmium.
The administration is also seeking to further the implementation of mineral diplomacy. U.S. special envoy Sergio Gor met with representatives from all five Central Asian countries in Astana, Kazakhstan, for the first in-person Critical Minerals Dialogue, ahead of a mining conference that drew more than 20 U.S. companies and government officials. Central Asia offers Washington a potential source of critical mineral access, but projects still face financing, infrastructure, processing, and governance hurdles that could help keep China central to the downstream supply chain.
🪖 Pentagon Expands List of Chinese Firms Barred from DoD Contracting
Pentagon widens scrutiny of Chinese firms.
The Pentagon expanded its Section 1260H list this week to 188 Chinese entities, adding major firms including Alibaba, Baidu, BYD, WuXi AppTec, and more. The list identifies companies the Department of Defense says operate directly or indirectly in the United States and are linked to China’s military or defense- industrial base. Inclusion does not impose formal sanctions, but the department will be barred from contracting directly with listed companies starting later this month and from buying their products through third parties beginning in 2027.
Several companies rejected the designations, and WuXi AppTec sued the U.S. government in federal court, seeking removal from the list. The biotech firm called its inclusion arbitrary, unsupported by facts, and the product of political pressure, arguing that the designation caused reputational and operational harm by branding the company a national security threat. Alibaba, Baidu, BYD, and NIO also pushed back publicly, with several of the companies saying they would seek removal or take legal action.
Beijing criticized the expanded list as a abuse of power and warned of a response if Chinese firms are not treated fairly. China’s Ministry of Commerce said the move undermined trade and supply chains and runs counter to understandings reached during May’s Trump-Xi summit. The Pentagon had briefly posted a similar expanded list in February before withdrawing it without explanation, and the latest version reinstated Chinese memory chipmakers CXMT and YMTC after their earlier omission drew criticism from China hawks in Washington.
🔄 SCOTUS Leaves Some Tariffs in Place, Admin Steps Up Trade Pressure
Tariff pressure keeps hitting China trade.
The Supreme Court has declined to review a challenge to Trump’s first-term China tariffs, leaving duties in place on hundreds of billions of dollars of Chinese goods. Importers continue to pay more than $35 billion annually under expanded Section 301 tariffs.
The Trump administration is also using Section 301 to pursue wider tariff pushes across specific labor and security issues. The U.S. Trade Representative announced on June 2 that it is targeting 60 economies, including China, the European Union, Japan, South Korea, Taiwan, Canada, Mexico, and the United Kingdom, over what it says are failures to enforce forced-labor import bans. The proposed tariffs would add 12.5% duties on imports from the economies in question. Written comments from interested parties are expected by July 6, with hearings on the matter set for July 7.
Trade pressure is also hitting the automobile sector, with Ford asking the Commerce Department for permission to keep importing the China-built Lincoln Nautilus because its U.S.-developed software is installed in China before the vehicle is sold in the United States. Other automakers are following suit, seeking to either receive authorizations similar to the one sought by Ford, or to reroute their supply chains away from China before 2027. The rule bars most Chinese-developed or Chinese-maintained connected-vehicle software beginning with model year 2027, followed by hardware restrictions for model year 2030, pushing automakers and suppliers to seek licenses or rework China-linked supply chains.
🇹🇼 Taiwan Defense Fight Moves From Taipei to Washington
KMT faces U.S. pressure on defense.
Taiwan’s defense budget debate spilled stateside this week as Kuomintang (KMT) Chair Cheng Li-wun used a U.S. trip to promote dialogue between Taiwan and China while defending her party’s handling of President Lai Ching-te’s controversial defense budget. Cheng said the KMT remains committed to Taiwan’s defense, but argued that peace in the Taiwan Strait requires taking permanent secession off the table. U.S. lawmakers pressed the opposition party over defense spending, with Sen. Dan Sullivan (R-AK) saying the KMT should work with Lai’s Democratic Progressive Party to resolve the defense budget issue, while Rep. Tom Suozzi (D-NY) said the KMT’s resistance to a larger defense package raised concerns about deterrence.
While in the United States, Cheng met with several other U.S. representatives, including House Foreign Affairs Committee Chairman Brian Mast (R-FL), Rep. Young Kim (R-CA), and Rep. John Rose (R-TN).
Source: TaiwanPlus News
Back in Taiwan, President Lai said Tuesday that he would not give up on increasing defense spending after Taiwan’s opposition-controlled legislature approved only part of his proposed $40 billion supplementary budget. The legislature signed off on U.S. weapons purchases but cut funding for domestically made drones and missiles, which Lai has prioritized as part of Taiwan’s asymmetric defense strategy. Lai also said his government would pursue separate legislation, supplementary budgets, or annual budget increases to keep defense projects moving, with the goal of increasing defense spending to 5 percent of GDP by 2030.
Taiwan also conducted its first live-fire test of U.S.-supplied HIMARS launchers on June 10, using the system in a drill from its western coast near a potential Chinese landing area. The exercise occurred as a $14 billion U.S. arms package remains awaiting Trump’s approval and as Taipei tries to demonstrate that it is investing in capabilities Washington has urged it to prioritize. Beijing’s Taiwan Affairs Office dismissed the drill as a bluff while Taiwan’s military said the training was meant to make live-fire exercises more realistic.
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