The problem runs deeper than just EUV technology... America has monopoly on x86 and with Nvidia buying ARM, there goes the entire IoT industry... x86/64 includes AMD which and other Intel clones...
Even if SMIC magically catches up tomorrow, it cannot replace the x86 processor. All desktop, laptop, etc use motherboards with sockets and chipsets that are tailored to Intel x86 and even a more limited scope America ban of just Intel processors will force most if not all computer makers to rip their supply chain and factories out of China...
Many software/OS like Windows, Autodesk, Adobe, and even AAA title PC games only work on Windows and only on x86....modern gaming for example requires Directx12, and for that you needs Microsoft Windows 10. Applications like Adobe Photoshop or Autocad, 3dsmax, etc need to be ran on either x86 processor or Apple Mac, all of which US can ban export to China... its the same reason Linux hasnt replaced Windows, because vast majority of software ecosystem was written for Windows. The US oil company I work for still runs some Windows 2003 servers because some properitary applications were written for it decades ago and they cannot just rip it out... Likewise Nvidia pushing the market to adopt DLSS means it has a leg up on AMD GPU, and thats also true for upcoming Chinese GPUs... gamers will wants games that support DLSS and AMD cannot offer that, but most likely US will force TSMC to ban Chinese GPU companies soon...
Even if China can fab 3nm chips tomorrow, most of the computing world are already on US platform and US can and will exploit and leverage this momentum and inertia...
This is just like the Google Play store thing but on a hardware level... Even before TSMC was forced to sever ties with Huawei most consumers in EU dropped Huawei phones when they couldnt support Google Play because they already got entrenched with Gmail, Google Maps, Youtube, etc these are not just apps but also represent other platforms and access to services that Google had built up the network effects of for almost two decades...
Lets be honest, America still has a lot of squeeze left in it yet
Thats not to say China doesnt have some levers too but it needs to start using them Now not later