"Effective at 11:59 p.m. eastern standard time on 11 November 2021 [04:59 GMT on 12 November], possession of any such securities by a United States person is prohibited", the executive order, published on Thursday, read.
Investors are permitted to conduct any transaction that will allow them to divest of securities in firms that Washington believes have links to the Chinese military, according to the order.
The new order amends a preceding directive published in November that merely prohibited investors from purchasing securities in these firms after 11 November 2021.
According to the Wall Street Journal newspaper, Chinese tech giants Alibaba, Tencent, and Baidu will be exempt from the ban amid fears of economic fallout should the three firms be placed on the US blacklist.
The Chinese Ministry of Commerce slammed the initial directive and accused the United States of exerting undue pressure on China.
US media outlets reported in November that Trump would introduce a set of hardline policies targeting China before his presidential term ends on January 20.