US Lawmakers Push for Fewer Tax Breaks to Reduce Reliance on Chinese Tech

By the Editorial Team · Saturday, July 4, 2026

Representative Nathaniel Moran introduced legislation to limit tax incentives for U.S. companies that use Chinese technology, aiming to reduce reliance on foreign entities viewed as national security threats. This approach seeks to encourage supply chain diversification through fiscal policy, reflecting bipartisan concern over China's data access and signaling a new strategy beyond regulatory bans.

A growing number of U.S. lawmakers are seeking to use the tax code as a tool to reduce corporate America’s reliance on Chinese technology, citing national security concerns amid increasing tension with Beijing. Representative Nathaniel Moran, a Republican from Texas, outlined his approach during a recent event at the Hudson Institute in Washington, D.C.

Moran emphasized that China should be considered an adversary in economic and technological spheres and criticized the current state of U.S.-China business relations as a “toxic relationship.” He introduced the Deterring Adversarial Access to Americans’ Data Act, legislation aimed at restricting certain tax benefits—such as bonus depreciation and research and development expensing—for U.S. companies that use technology from what are described as “foreign entities of concern.” These entities potentially have access to sensitive American data, posing security risks, Moran said.

The proposed measure seeks to incentivize companies to diversify their supply chains by offering a one-year grace period for businesses to transition away from Chinese technology and shift toward domestic or allied alternatives. Moran suggested this strategy moves beyond regulatory bans, like those levied against TikTok, by leveraging fiscal policy to encourage longer-term decisions in supply chain management.

The initiative reflects broader bipartisan concerns shared by congressional panels over China’s strategic use of data collection and the perceived lack of effective countermeasures by the U.S. government. During the Hudson Institute event, moderated by senior fellow Jason Hsu, the discussion addressed the practical challenges companies face in unwinding entrenched Chinese supply chain connections while balancing national security imperatives and business development needs.

While Moran’s bill has garnered attention, its chances of passage remain uncertain, especially given Congress’s notably low legislative productivity in the current session. The event underscored worries about foreign adversaries, primarily China, leveraging technology platforms for large-scale access to American data. Examples raised included surveillance-capable applications and data-harvesting platforms that have prompted intensified scrutiny.

The Chinese Embassy in Washington did not respond to requests for comment. However, China has consistently denied accusations of data theft or espionage targeting private firms, describing such U.S. claims as exaggerated attempts to hinder Chinese companies. In April, Beijing refuted White House assertions alleging Chinese involvement in an “industrial-scale” operation to steal U.S. artificial intelligence technology, calling the allegations “baseless.” Similarly, in May, the U.S.-China Economic and Security Review Commission accused Beijing of gathering and exploiting American data as a strategic asset.

The evolving U.S. approach toward Chinese technology integration, particularly through fiscal measures, signals a shift in how policymakers aim to confront perceived national security threats stemming from economic interdependence.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.