Investing.com -- Chinese state-backed funds are halting new investments in U.S. private equity, the Financial Times (FT) reported Monday, marking a fresh escalation in the country’s response to President Donald Trump’s trade offensive.

The report said several large Chinese investors have recently stopped committing capital to funds managed by U.S.-based private equity firms, a move driven by pressure from Beijing.

In some cases, investors are also asking to be excluded from U.S. deals altogether, even when the investment is led by non-American buyout firms, according to the FT.

The U-turn comes as trade tensions between the world’s two largest economies continue to mount.

Over the past three weeks, the Trump administration has introduced tariffs of up to 145% on Chinese goods, while Beijing has responded with levies reaching 125%.

The FT report notes that Chinese sovereign wealth funds have been major backers of some of the largest U.S. private equity players, including Blackstone (NYSE: BX ), TPG Inc (NASDAQ: TPG ), and Carlyle Group Inc (NASDAQ: CG ).

In some instances, the retreat includes walking away from fund allocations that had been under consideration but not finalized.

Among the institutions pulling back is China Investment Corporation (CIC), according to the report. Other state-backed funds are also said to have adopted similar positions.

In recent years, regulatory hurdles have restricted direct Chinese investment into Western companies and infrastructure. Indirect channels—such as limited partnerships in private equity funds—had remained one of Beijing’s few viable routes to deploy capital abroad.

The FT highlighted that Chinese investors have previously backed prominent firms like Global Infrastructure Partners, now owned by BlackRock (NYSE: BLK ), as well as Thoma Bravo, Vista Equity Partners, Carlyle, and Blackstone.

Over the past 30 years, Chinese state-backed investors like CIC and the State Administration of Foreign Exchange (SAFE) have played a major role in fueling the rise of U.S. private equity, once a niche sector now managing $4.7 trillion.

Per Global SWF, as of 2023, both CIC and Safe had roughly 25% of their $1.35 trillion and $1 trillion in assets, respectively, allocated to alternative investments.