Chip designers become the latest casualties in US-China trade war even as Trump’s tariffs are ruled illegal

The U.S. Court of International Trade has ruled that the Trump administration’s emergency tariffs enacted under the so-called “Liberation Day” policy were unconstitutional, dealing a legal blow to one of the more aggressive trade maneuvers in recent years. Still, this did not stop the US government from imposing fresh restrictions on the chip design industry.

While the court determined that the administration overstepped its authority under the International Emergency Economic Powers Act (IEEPA), chip design software vendors are now caught in a parallel crackdown.

Fresh restrictions

New export controls imposed last week are limiting the sale of Electronic Design Automation (EDA) tools to China and its military affiliates, dealing another blow to the Chinese semiconductor industry.

EDA software is critical infrastructure for designing and manufacturing chips. Without it, hardware innovation stalls. US vendors like Cadence, Synopsys, and Germany’s Siemens, all dominant forces in the EDA market, have confirmed the restrictions and warned investors of possible disruptions.

According to the Bureau of Industry and Security (BIS), which oversees U.S. export policy, the new rules are aimed at preventing Chinese entities from using American-designed software to develop semiconductors for military use. As of May 23, any export, re-export, or in-country transfer of EDA software to China requires a US export license.

Industry response

Siemens has committed to keep helping its Chinese customers in whichever way they can. “Siemens has supported customers in China for more than 150 years and will continue to work with our customers globally to mitigate the impact of these new restrictions,” the company said in a statement.

Meanwhile, Cadence and Synopsys both flagged potential financial impacts. Synopsys even suspended some forward-looking guidance after receiving formal notice from the BIS.

Looking forward

The dual developments highlight the fragmented nature of the US-China trade tensions. Even as the courts push back against executive overreach on tariffs, executive agencies continue to wield expansive powers over exports.

China, for its part, has not been idle. Domestic alternatives like Huawei’s in-house EDA suite and X-Epic, a rising player in China’s semiconductor ecosystem, are attempting to fill the void left by restricted Western software.