New Momentum, Old Problems: Transatlantic Export Control Considerations

Introduction

Lawmakers recently introduced the Multilateral Alignment of Technology Controls on Hardware Act (MATCH Act). This bill proposes extending and coordinating U.S. export restrictions on semiconductor manufacturing equipment to allied partners. The bill’s primary targets are leading lithography and equipment suppliers, such as Dutch company ASML, as well as Japanese companies Nikon and Canon. The stated goal of the bill is to close gaps that allow China to acquire advanced chipmaking tools through non-U.S. suppliers, creating an uneven playing field for U.S. producers. While the MATCH Act underscores a growing bipartisan effort in Washington to curb Chinese advanced technology capabilities, the bill’s breadth and its diplomatic mechanics introduce serious questions for European allies and U.S. transatlantic relationships.

Diplomatic and Multilateral Coordination Considerations

The MATCH Act is premised on the idea that the United States can align export control regimes across allied governments. This view is politically ambitious and operationally ambiguous. The Netherlands and Japan have undertaken significant—and often discreet steps to restrict toolmakers from supplying and serving advanced Chinese fabs, partly in response to U.S. pressure, while attempting to minimize Chinese retaliation. However, codifying those restrictions into a U.S.-mandated multilateral framework is very different from ongoing diplomatic alignment.

In both the Netherlands and Japan, governments cannot apply unilateral controls that are not otherwise controlled under the Wassenaar Arrangement, the dual-use export control regime. The Netherlands and Japan thus continue to prioritize multilateral engagement over unilateral measures that also entail significant commercial downsides to national champions.

Allied governments are sensitive to sovereignty concerns for myriad reasons, particularly in Europe. U.S. pressure related to the now-delayed 50 percent affiliates rule in September 2025 led in part to the Dutch claw-back of control of mature node chip company Nexperia. This decision led China to retaliate against Nexperia, ultimately producing widespread supply chain disruptions, including shutdowns at Honda facilities in Mexico.

Foreign governments may also be wary of new export controls as a U.S. legislative mandate rather than a negotiated arrangement. First, ASML derived 27 percent of its revenue from China in 2025 (versus roughly 16 percent in the United States). Second, countries like Japan and the Netherlands cannot simply agree to join a mini-regime covering deep ultraviolet (DUV) lithography equipment. Instead, both would require intensive legislative input that is both onerous and time-intensive. With recent presidential comments about Japan and also recurring threats to invade a NATO ally, the domestic politics in either country do not favor closer cooperation with the United States, in particular cooperation that requires legally binding changes to a core part of those countries’ post–Cold War ethos surrounding matters of international peace and security. This is especially true when enforcement of such rules would be conducted by severing access to U.S.-controlled technology, rather than via a central EU regulatory authority.

Compounding an already complex diplomatic situation, another factor is the inability of the U.S. Bureau of Industry and Security (BIS) to undertake these types of weedy plurilateral negotiations, which require highly specialized expertise across semiconductor value chains. BIS has recently restricted travel to the Wassenaar Arrangement and has significantly curtailed staff-level engagement with foreign governments. Moreover, massive staff departures—including long-serving experts who have negotiated these deals previously—imperil the capacity of BIS if it were to resurrect trilateral or plurilateral negotiations seeking additional controls.

There also exists a clear structural mismatch between the United States and the European Union as it relates to federal-level jurisdiction. While the European Union has made progress in recent years toward developing a standardized export control list, member states still retain the authority to develop and enforce their own export controls. The lack of a BIS-equivalent with enforcement authority among member states complicates MATCH Act coordination and could heighten the risk of retaliation for individual member states like the Netherlands, which relies on critical Chinese imports to sustain advanced manufacturing capabilities.

Supply Chain Disruptions, Including Memory Chips

The MATCH Act’s most immediate commercial risk lies in its effects on the global memory chip supply chain, which is in a historic supercycle. Memory chips are critical in the development and deployment of advanced AI systems, but the U.S. domestic supply of memory chips remains highly limited. Memory is important because model weights, activations, and key-value caches reside in high-bandwidth memory during training and inference. The speed at which data moves between memory and compute typically determines how large a model can be, how fast it can respond, and how many requests it can serve simultaneously. A shortage of memory chips could undermine a core goal of the U.S. government: to accelerate, diffuse, and export advanced AI systems.

The 2026 memory shortage is structural and related overwhelmingly to demand for AI buildout. Hyperscalers have obtained long-term supply agreements with memory chip producers, guaranteeing priority access at premium but stable prices. Data centers are forecast to account for 70 percent of all memory chip demand in 2026, up precipitously from recent years. Europe currently hosts more than 3,000 data centers, trailing only behind the United States as the world’s largest regional hub. Just as memory prices have surged approximately 90 percent in Q1 2026, the European Commission will unveil plans in May 2026 to triple the bloc’s data center capacity within seven years, with Brussels pushing to rapidly increase its cloud compute capacity. The current crunch is broadly anticipated to exist well into the 2030s.

China’s two dominant memory chip producers are CXMT, which produces dynamic random-access memory (DRAM) chips, and YMTC, which produces NAND wafers. These companies rely heavily on ASML equipment. An abrupt cutoff of ASML tooling exports or servicing, or impediments to new equipment deliveries, would degrade these companies’ production capacity. Any disruption to CXMT and YMTC would amplify price pressure across devices and enterprise servers at precisely the moment the United States is seeking additional supply chain resiliency. MATCH Act implications are thus significant. Disruptions to memory chips made in China could impact hyperscalers and consumer electronics producers alike. These supply constraints would impact not only the U.S. AI agenda but could also impede European efforts to scale AI as part of its technology sovereignty package.

Chinese Retaliation and Indigenization Acceleration

China has the incentive and tools to retaliate. The country has already demonstrated a willingness to impose export restrictions on a wide range of critical minerals. In April 2026, China issued “Regulations on Industrial Chain and Supply Chain Security.” This action, which takes effect immediately, elevates existing but disparate legal tools, such as export controls and anti-sanctions provisions, into a unified economic statecraft framework. A sweeping U.S. legislative action targeting Chinese chipmakers and their foreign equipment suppliers would almost certainly accelerate Beijing’s use of these instruments.

Chinese retaliation would not be relegated to the United States; it would directly implicate European technology and consumer goods producers. This comes at a time when the European Union has made progress across its de-risking agenda, including through its updated Economic Security Strategy. As the European Commission continues to play a deeper role in European export control policy formulation, U.S. action targeting an individual member state with extraterritorial measures would undercut EU progress on developing a more unified approach to controls while opening the Netherlands to Chinese retaliation.

The MATCH Act also does not fully account for political dimensions. The act is framed as a mandate rather than a partnership and comes as the United States continues to impose steep tariffs and other trade remedies against European countries. The extraterritorial dimension to U.S. restrictions could heighten concerns that failure to comply with U.S. export controls could result in retaliation via tariffs or the withholding of weapons and intelligence.

Long-term, additional restrictions on DUV equipment in China could accelerate Chinese domestic capacity. In December 2025, China introduced its own “50 percent rule.” This indigenization measure requires fabs to source at least half of their equipment domestically, aiming for 50 percent domestic tooling by the end of the decade. This provision is intended to bolster companies such as Shanghai Micro Electronics Equipment (SMEE). Since the introduction of the 50 percent rule, foreign companies with fabs in China, such as SK Hynix and Samsung, have received temporary one-year waivers allowing them to import foreign DUV machines. This highlights that China’s wafer fabrication ecosystem remains highly dependent on foreign equipment, and its domestic lithography production accounts for only approximately 1 percent of its needs.

Given China’s ambitions to indigenize the entire semiconductor value chain, the U.S. government should view this as a historic opportunity to redouble efforts to export critical technology to China. Governments worldwide are recognizing that “strategic indispensability”—creating products others need in order to leverage them geopolitically—affords tremendous international power. The more the United States reduces these exports, the less leverage it has over future outcomes. It also risks sharply reducing the market share of an allied champion firm, while bolstering Chinese indigenization efforts.

Other Legislative Proposals

The MATCH Act is part of a broader slate of bills slated for markup in April in what could be the biggest export control action since the Export Control Reform Act of 2018. The new package of bills includes the Semiconductor Technology Resilience, Integrity, and Defense Enhancement (STRIDE) Act, the Deterring American AI Theft Act, and the Interagency Coordination and Export Control Act, among others. Together, these reflect congressional dissatisfaction with the pace of the U.S. Department of Commerce in imposing meaningful restrictions on China. However, the proposed remedies raise process concerns of their own.

The Interagency Coordination and Export Control Act would allow the Departments of State, Defense, or Energy to submit regulatory proposals directly, preventing the ability of the Commerce Department from delaying the adoption of new rules. Once proposed, rules would be decided at senior agency levels, outside of standard processes that include public comment periods. Decisions would function similarly to export control licenses.

The intent is to intervene where the Commerce Department has been slow to act, but it may produce interagency conflict and inconsistent signaling to industry, let alone foreign partners. Export control effectiveness depends significantly on predictability and enforcement credibility. These outcomes deteriorate when multiple agencies are empowered to submit competing proposals, particularly absent a formalized mechanism for industry participation and input.

Similarly, the STRIDE Act mandates that the State Department provide foreign-direct product rule (FDPR) recommendations to the Commerce Department. This raises questions about whether the State Department has the technical expertise and bandwidth to make those determinations. The FDPR is a precision legal instrument carried out by the Commerce Department, and its misinterpretation or misapplication could expand compliance burdens across allied supply chains without commensurate security benefit.

Conclusion

Renewed momentum for export controls in Congress reflects concern about the limits of unilateral U.S. controls in the face of China’s access to foreign semiconductor equipment. It also reflects growing congressional dissatisfaction with the administration’s approach toward China. But legislative proposals in the United States overlook some of the intricate diplomatic elements involved with these proposals.

These proposals are also at odds with the current White House posture toward controls. Under the current administration, a new statutory mandate that limits the administration’s room to maneuver could complicate negotiations as the United States seeks to maintain its economic détente with China ahead of a May meeting between President Donald Trump and President Xi Jinping. Additional restrictions also contravene key features of the administration’s AI dominance strategy, including exporting a U.S. AI “stack” and ensuring U.S. geopolitical dominance through exports to maintain market share and leverage.

Perhaps most problematic, however, is that the bill glosses over the desires and abilities of foreign governments to adjust their export control regimes to U.S. rules. Both require democratic consent and input. Already facing pressure from China, further spotlighting foreign critical technologies could open allied economies to additional input restrictions or other forms of retaliation.

These proposals come at a moment of serious geopolitical complexity, spanning memory chip shortages, active U.S.-China trade talks, diminished institutional capacity at BIS, and growing mistrust with European allies, which are under growing strain in a world increasingly dominated by weaponized chokepoints. By threatening core pillars of the transatlantic relationship, the United States risks undermining the partnerships and opportunities that have led to sustained U.S. technological leadership. Every blunt instrument applied accelerates Chinese indigenization, strains allied relationships, and narrows the window in which Western equipment remains indispensable.

Emily Benson is a senior associate (non-resident) with the Europe, Russia, and Eurasia Program and the Center for Strategic and International Studies (CSIS) in Washington, D.C. Lexi Linafelter is a program coordinator and research assistant with the CSIS Europe, Russia, and Eurasia Program.