The U.S. has banned American firms from selling components to a major Chinese tech company.
The U.S. Department of Commerce announced the seven-year ban against telecom equipment maker ZTE on Monday.
The agency said ZTE broke the terms of an agreement it made with the U.S. last year. That agreement came after the company illegally shipped equipment to Iran and North Korea.
Secretary of Commerce Wilbur Ross said in a statement: "ZTE misled the Department of Commerce. ... This egregious behavior cannot be ignored."
The move comes as trade tensions between the U.S. and China continue to escalate.
But the Department of Commerce said the decision is a "regulatory action" and is "unrelated to any ongoing trade-related actions."