The European Union has told the Biden administration it’s concerned that US restrictions on outbound investments aimed at China could hit companies in the bloc, adding yet another trade irritant to transatlantic ties.

Senior EU officials have strongly communicated the worries to their counterparts in the US, according to people familiar with the matter and documents seen by Bloomberg.

The concern is that an executive order announced by President Joe Biden in August has extraterritorial aspects that could end up affecting trade in the EU that involves companies based in Europe with US investors on the one side and Chinese owners on the other, the people said.

Though the executive order is narrow in scope — targeting some Chinese companies working primarily in areas related to artificial intelligence, quantum computing and advanced semiconductors — it would likely apply to US persons anywhere in the world, one of the people said.

A spokeswoman for the Treasury Department said the order is targeted narrowly to focus on U.S. national security interests. The EU didn’t immediately reply to a request for comment.

The EU is still analyzing the order’s full impact and aims to address the concerns before the instrument is fully implemented next year, the people said.

The concerns add to a growing list of issues facing the EU-US trade relationship. During a summit in Washington last week, the two allies failed to conclude two major deals: one on steel aimed at turning the page on Trump-era tariffs and a separate critical minerals agreement needed to provide European firms with access to some of the benefits of Biden’s green subsidies plan.

The controls on outbound investments are part of US and EU economic security plans to limit the ability of countries such as China and Russia to obtain know-how or capital for the development of advanced technologies that could be used for military purposes.

The US is further down the road in these efforts. The EU recently identified a list of critical technologies on which it will perform risk assessments, and is aiming to present its own preliminary proposal on outbound investments later this year.

“This instrument requires further work, not because of skepticism but rather because it must be precise and useful, and we need to define well what we want to control, for example the transfer of know-how, talent or capital flow,” Spain’s junior trade minister Xiana Mendez told Bloomberg News last week.