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The Trump administration has said it does not want one of the world's biggest phone carriers, China Mobile, to provide telecom services within the US, citing national security concerns.
State-owned China Mobile applied to the US Federal Communications Commission (FCC) for a licence to do so in 2011.
But the US Department of Commerce has recommended the licence request be denied.
The advice comes amid rising trade tensions between the US and China.
"After significant engagement with China Mobile, concerns about increased risks to US law enforcement and national security interests were unable to be resolved," said the assistant secretary for communications and information at the Commerce Department, David J Redl.
"Therefore, the executive branch of the US government, through the National Telecommunications and Information Administration [NTIA]... recommends that the FCC deny China Mobile's Section 214 license request."
Neither China Mobile nor the FCC were immediately available for comment on what their next steps would be.
The move by the NTIA - an arm of the Commerce Department that advises US President Donald Trump on telco and information issues - comes at a time of heightened tensions between the US and China over trade and telecom issues.
In April, the Commerce Department found that the Chinese state-owned technology giant ZTE had violated trade bans with North Korea and Iran.
ZTE is based in Shenzhen and is a Chinese state-owned technology giant
A ban was placed on the firm that prevented it from buying parts from US suppliers - a move that forced Shenzhen-based ZTE to suspend major operations, and threatened to destroy its business.
However, following some pressure from Beijing, the US struck a deal with ZTE that would involve the firm paying a $1bn penalty, hiring a compliance team chosen by the US, and replacing much of its management board, among other measures.
In return, the US said it would remove the ban - a negotiation that has been linked to wider trade tensions between the US and China.
ZTE has fulfilled many of these requirements, however, a group of bipartisan senators, including US Senator for Florida Marco Rubio, is currently attempting to maintain the ban on the firm via an amendment to a defense bill.
Reacting to research by The Wall Street Journal that has shown ZTE's management overhaul may not be as dramatic as first thought, Mr Rubio last week questioned why the Trump administration was continuing negotiations with the Chinese firm.
A group of bipartisan US senators including Republican Marco Rubio are attempting maintain the ban on ZTE
Meanwhile, on Friday, as part of the ongoing trade spat between the US and China, the two giants are expected to introduce further tariffs on each other's goods.
The Trump administration is expected to bring into effect the first tranche of 25% tariffs on $34bn of Chinese goods.
And in retaliation, China is expected to enact its first round of tariffs on $34bn worth of US products.
