Exclusive-US suspends licenses to ship nuclear plant parts to China, sources say

The U.S. Commerce Department has suspended export licenses for nuclear equipment suppliers to China, impacting hundreds of millions of dollars in business, as trade tensions escalate. This action, affecting companies like Westinghouse and Emerson, is part of a broader trend of restricted sales to China, including jet engines and ethane, amidst disputes over tariffs and technology. While a call between Presidents Trump and Xi raised hopes for renewed talks, the outlook for these suspensions remains uncertain.

Analysis

The U.S. Department of Commerce has recently suspended export licenses for nuclear equipment suppliers to China, a development impacting business estimated to be worth hundreds of millions of dollars. This action, affecting companies such as Westinghouse and Emerson (NYSE:EMR), is part of a broader escalation in the U.S.-China trade war, which has shifted towards restricting supply chains. Over the past two weeks, new export restrictions have been imposed across various sectors, including license requirements for a hydraulic fluids supplier, suspensions for GE Aerospace (associated with GE) for jet engines destined for China’s COMAC aircraft, and new license requirements for ethane shipments to China, affecting companies like Enterprise Product Partners (NYSE:EPD) and Energy Transfer (NYSE:ET). Enterprise Product Partners reported that its emergency requests to complete three ethane cargoes, totaling approximately 2.2 million barrels, have not been granted. Similarly, companies selling electronic design automation software, such as Cadence Design Systems (NASDAQ:CDNS), have also faced new restrictions. These measures coincide with Chinese restrictions on critical metals, further straining global supply chains. While a recent call between U.S. President Trump and Chinese President Xi Jinping has led to expectations of further talks, it remains unclear whether these suspensions will be lifted or how quickly. The Commerce Department confirmed on May 28th that it is reviewing exports of strategic significance to China and has, in some cases, suspended existing licenses or imposed additional requirements pending this review. The overall sentiment surrounding these developments is strongly negative, with an uncertain tone and a market impact score of 0.65, reflecting significant investor concern. Per-ticker sentiment indicates a strongly negative outlook for EMR, GE, EPD, and CDNS (-0.7, -0.7, -0.7, and -0.6 respectively), and a negative outlook for ET (-0.5).

Key Decisions for Investors

• Investors should exercise caution regarding companies with significant exposure to U.S.-China trade in sensitive sectors, particularly nuclear equipment (e.g., EMR), aerospace (e.g., GE), energy commodities (e.g., EPD, ET), and advanced technology (e.g., CDNS), given the recent suspension of export licenses and heightened geopolitical tensions.
• Monitor upcoming U.S.-China trade negotiations closely, as any resolution or further escalation will directly impact the outlook for companies affected by these export controls and the reinstatement of their licenses.
• Consider reviewing portfolio allocations in EMR, GE, EPD, ET, and CDNS due to the strongly negative sentiment and direct impact of these U.S. government actions, which could materially affect revenue and profitability.