Businesses are scared to lose access to data hosted at US entities, because this recently happened, so they have good reason to fear something like that.

AFAIK, the US has never done that with IP space, but if we did see evidence of that, then you'd see similar worries about that for sure. But I think most of us see it as pretty implausible to happen, since the consequences of such move would be huge, and would probably end the internet as we know it today.

The US won't want to do that because China will have an alternative ready within a day and every China-friendly country will migrate to it. Now US leadership is demented, luckily they've never heard of IPs and I really don't believe it would happen. I think the likelihood of them starting WW3 is more likely than using IPs for power games.