President Donald Trump has declared a national emergency to protect US computer networks from "foreign adversaries".
The president signed an executive order which effectively bars US companies from using foreign telecoms believed to pose a security risk to the country.
Mr Trump does not name any company specifically in the order.
However, analysts suggest it is mainly directed at Chinese telecommunications giant Huawei.
A number of countries - including the US - have raised concerns that the company's products could be used by China for surveillance. Huawei has said its work does not pose any threat.
The US is also embroiled in an escalating trade war with China.
What does the order say?
According to a White House statement, Mr Trump's order aims to "protect America from foreign adversaries who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services".
It gives the secretary of commerce the power to "prohibit transactions posing an unacceptable risk to the national security", the statement adds.
The move was instantly welcomed by Federal Communications Commission Chairman Ajit Pai, who said in a statement it was "a significant step toward securing America's networks".
The US had already restricted federal agencies from using Huawei products and has encouraged allies to shun them, while Australia and New Zealand have both blocked the use of Huawei gear in next-generation 5G mobile networks.
Huawei is the world's largest maker of telecoms equipment
But Huawei has vehemently denied the allegations.
Meanwhile, its chairman Liang Hua said it was "willing to sign no-spy agreements with governments" during a meeting in London on Tuesday, as concerns over the security of its products used in next-generation 5G mobile networks continued to grow.
What about the trade war?
Mr Trump's latest move is also likely to inflame relations with China, which are already under strain because of the trade war.
The US president has complained about China's trading practices since before he took office in 2016.
The US more than doubled tariffs on $200bn (£154.9bn) of Chinese goods on Friday and China retaliated with its own tariff hikes on US products.
This escalated the situation which only recently seemed to be nearing a conclusion.
However, stock markets steadied on Wednesday as hopes rose that the two countries might resume talks next month.
Mr Trump said he expected to meet his Chinese counterpart, Xi Jinping, at the G20 summit in Japan.
China's foreign ministry spokesman Geng Shuang also said that the two men "maintain contact through various means".