President Donald Trump has called China’s DeepSeek artificial intelligence (AI) system a “wake-up call” for the American technology sector and emphasized the need for the United States to remain “laser-focused” on winning the AI race.
His warning reflects growing concerns that China’s rapid advancements in AI—enabled by loopholes in US export control laws—pose a direct threat to national security and economic dominance. Without decisive action, the United States risks losing its competitive edge in one of the most consequential technology races of the twenty-first century.
The launch of DeepSeek has heightened security concerns in the United States, leading to calls for stricter export controls to curb China’s access to advanced AI technologies. In response, the state of New York banned DeepSeek from government devices, citing serious national security risks, including data privacy vulnerabilities and state-sponsored censorship. The Pentagon and Capitol Hill also banned the use of the chatbot. Meanwhile, Beijing continues to advocate for open-source AI, arguing that broader accessibility fosters global technological advancement. However, critics warn that unrestricted openness could enable adversarial nations to exploit cutting-edge AI research for mass surveillance, cyber warfare, and disinformation campaigns. While open-source AI has fueled rapid innovation and democratized access to AI tools, its potential misuse—particularly by authoritarian regimes—raises concerns about national security and economic competition.
DeepSeek represents a fundamentally different model of AI—one that enforces ideological censorship and suppresses politically sensitive topics. Unlike American AI models, which prioritize free expression and open knowledge, China’s AI platforms are deeply integrated into its system of authoritarian control. The United States should not only maintain its technological edge but also actively promote American AI as the superior alternative—one that is free from state-imposed censorship and aligned with democratic values. AI is increasingly redefining global power, with nations competing for technological supremacy. As AI reshapes industries, economies, and national security, the United States faces a critical challenge in maintaining its leadership. A comprehensive strategy should (1) strategically develop effective regulations; (2) build practicable enforcement; (3) increase investment in research and development (R&D); (4) foster domestic innovation; (5) enhance international collaboration; and (6) implement a responsible export regime that balances security with appropriate trade and economic ties.
The Trump Administration’s AI Strategy: Safeguarding American Leadership
At last month’s AI summit in Paris, Vice President JD Vance reaffirmed the US commitment to technological dominance, stating, “The United States of America is the leader in AI, and our administration plans to keep it that way. The US leads in AI with key components such as advanced semiconductor design, frontier algorithms, and transformational applications.”
Vance also acknowledged the dangers presented by foreign adversaries who have weaponized AI for mass surveillance, censorship, and historical revisionism and now pose a direct challenge to US leadership in AI and advanced computing. He pledged that the administration would take decisive action to safeguard American AI technology from theft and misuse and ensure that AI remains free from ideological bias. His remarks were widely seen as a direct rebuke of China’s AI-driven censorship—exemplified by DeepSeek’s suppression of discussions on topics such as the Tiananmen Square massacre and the Uyghur genocide.
This commitment to technological leadership is reflected in the Trump administration’s America First Trade Policy memo, which explicitly recognizes the strategic importance of maintaining US superiority in emerging technologies. The policy requires the secretaries of state and commerce to undertake a comprehensive review of the US export control system to address challenges posed by adversaries and enhance the US technological edge. The memo calls on cabinet members to identify and strengthen policies to protect and advance US leadership in AI, semiconductors, and other critical industries, specifically by identifying and closing loopholes that enable the transfer of strategic goods and technologies to rival nations. Furthermore, the policy calls for strengthening enforcement mechanisms to ensure that foreign entities comply with US export restrictions, preventing unauthorized access to sensitive technologies that could undermine national security.
President Trump further signaled the importance of these technologies in the modern economy through his Executive Order on Removing Barriers to American Leadership in Artificial Intelligence, which states that it is US policy “to sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security.” He also signaled their importance through the creation of a President’s Council of Advisors on Science and Technology, which identifies “a national security imperative for the United States to achieve and maintain unquestioned and unchallenged global technological dominance.” The president adds, “To secure our future, we must harness the full power of American innovation by empowering entrepreneurs, unleashing private-sector creativity, and reinvigorating our research institutions.”
These actions underscore the reality that the twenty-first century will be shaped by the nation that leads innovation. This generation’s space race is driven by technologies invisible to the naked eye, and the winners and losers in AI and microchips will be determined by mere nanometers. The country that dominates will be the one producing the components and software that run these applications. If the United States is to prevail, export control strategies will need to balance national security concerns with the need to allow American companies to compete fairly in the global market.
The Trump administration aims to preserve and advance American leadership in AI and semiconductor development while countering technological threats from geopolitical rivals. Vance’s speech, coupled with reinforced export control policies, signals a decisive shift toward a more aggressive stance against nations seeking to exploit US progress in AI and advanced computing and reflects an understanding that to maintain US dominance in innovation and national security, export controls will need to evolve with shifting global power dynamics.
Export Controls: Balancing Security and Economic Leadership
US export control laws are essential to protecting national security, foreign policy interests, and economic competitiveness by preventing sensitive technologies from falling into adversarial hands. The race for AI, semiconductors, and quantum computing has profound security implications, as weak enforcement allows geopolitical rivals to strengthen their military and economic positions, ultimately undermining US strategic interests.
Nevertheless, if these restrictions go too far, they could weaken the very industries they are meant to protect. Export controls have traditionally followed a two-step process: first, identifying restricted goods via an Export Control Classification Number (ECCN) on the Commerce Control List (CCL); second, listing foreign entities of concern on the Bureau of Industry and Security’s (BIS) Entity List, the Office of Foreign Assets Control’s Specially Designated Nationals (SDN) List, or other federal watchlists managed by agencies like the Commerce, Treasury, or State Departments.
However, the Biden administration’s semiconductor export control rules—especially those introduced on October 7, 2022—marked a shift by restricting entire categories of chips and manufacturing equipment under specific ECCNs, severely limiting trade before individual companies were designated as bad actors. While these measures aim to protect national security and slow China’s technological advancements, they also risk harming US semiconductor firms (such as NVIDIA, AMD, and Intel) that rely on global markets for revenue. Overly aggressive restrictions could stifle innovation and competitiveness, especially since the industry depends on substantial R&D investments to maintain US technological leadership.
While the 2022 CHIPS and Science Act (CHIPS Act) and other efforts to boost domestic production may help offset some risks, overly strict export controls could undermine the semiconductor industry’s ability to thrive—threatening not only the sector itself but also America’s global economic primacy.
China’s increasing focus on semiconductor self-sufficiency and cyber warfare underscores the risks of getting export protections and enforcement wrong. To safeguard the US technological edge, Washington will need to close regulatory loopholes, monitor foreign transactions, and enforce compliance both domestically and internationally. But rules so onerous that they sever American chips from the global market or restrict their sale so severely that allies have to go elsewhere to purchase components to meet their computing and research needs will backfire by forcing foreign countries to build their tech infrastructure with non-American technologies. Export restrictions are critical in preventing adversarial nations from exploiting AI and advanced computing for military applications. However, to win this next stage of industrial history, the United States will need to ensure that the rest of the world relies on preeminent US technologies.
US export laws will have to strike a delicate balance between promoting legitimate trade and ensuring that national security and economic leadership are not compromised in a rapidly evolving global landscape.
Challenges in Enforcement: Addressing Gaps in US Export Controls
The Export Control Reform Act of 2018 modernized regulations to protect AI, quantum computing, and biotechnology, yet enforcement remains a persistent challenge. China continues to exploit intermediaries and shell companies to bypass restrictions, making detection and enforcement difficult.
The Foreign Direct Product Rule (FDPR), which restricts foreign-made products derived from US technology, has suffered from inconsistent enforcement by US allies, allowing China to procure restricted technologies through alternative suppliers. Additionally, some corporations misclassify exports, underreport transactions, or use deceptive practices to evade controls.
To strengthen enforcement, the US government should expand the FDPR to cover all AI chips, semiconductors, and critical technologies developed with US tools or software, regardless of their manufacturing location. AI-driven tracking of export records and financial transactions will help detect illicit technology transfers, and substantially increased financial penalties for violations will serve as a deterrent. The US Department of Commerce, in coordination with the BIS, should also introduce a robust whistleblower program, offering monetary incentives for intelligence on export violations. Furthermore, penalties for US firms complicit in export control evasion should include criminal liability and permanent trade bans.
In October 2023, the United States tightened export controls to reinforce national security and maintain technological leadership. New restrictions on high-performance AI chips from NVIDIA, Advanced Micro Devices (AMD), and Intel introduced performance density thresholds, requiring export licenses. Controls on semiconductor manufacturing equipment, such as extreme ultraviolet lithography machines, were expanded to restrict exports from ASML and Applied Materials to China. Additionally, several Chinese tech firms were added to the BIS Entity List, effectively blocking their access to US technology.
Given the limitations of unilateral controls, the US has bolstered collaboration with key allies—including the Netherlands, Japan, South Korea, and Taiwan—to align export policies more effectively. Initiatives such as the Chip 4 alliance aim to secure semiconductor supply chains and limit China’s technological advancements. However, these restrictions have also impacted US companies, with NVIDIA and AMD experiencing revenue losses as China remains a major market. In response, these firms are developing less powerful chips to comply with regulations while shifting their focus to alternative markets and next-generation technologies.
The AI Diffusion Rule: A New Front in Export Control Laws
In January 2025, the Biden administration, during its final week in office, introduced an interim final rule (IFR), Framework for Artificial Intelligence Diffusion, ostensibly to close loopholes the administration argued had allowed China to acquire AI chips through third-party nations. The new IFR created country- and company-specific restrictions on access to top-tier semiconductors. Under this policy, Chinese firms are now banned from purchasing advanced AI chips without a US Commerce Department license.
To prevent backdoor access, the United States implemented a tiered country system, which ostensibly allowed unrestricted AI chip exports to close allies—though companies are banned from offshoring their compute power above a certain percentage—while imposing shipment caps on most of the rest of the world.
Critics argue that this tiered system and the use of compute power as a metric for export restrictions are unenforceable and so burdensome that they will lead the United States to cede market share to global competitors.
Indeed, while increased scrutiny of known gray-market resale hubs—such as Hong Kong, Malaysia, and the United Arab Emirates—will be required to cut off Chinese access to the most powerful microprocessors, the framework arguably penalizes countries with little or no history of illicit transfers. Only 18 countries make the least-restricted tier, and not all of them are in the European Union. In response, the European Commission released a statement expressing concern and the hope that Washington would reconsider. Latvia, Estonia, and Lithuania expressed “concern” that the rule “risks creating artificial divisions in the EU Single Market and [undermining] the development of our national AI ecosystems.”
One serious unintended consequence of the IFR is that nations unable to access superior American AI chips could be forced to rely on inferior Chinese alternatives, such as Huawei’s AI processors. Huawei’s chips are significantly less powerful than NVIDIA’s, making them a poor substitute for high-performance computing. This shift would not only reduce global AI development capacity but also increase dependence on Chinese technology, further empowering Beijing’s digital influence. Instead of isolating China, the rule could fragment the global AI ecosystem, making it more difficult for the US to maintain technological leadership.
The United States needs to reassess and refine its approach to export controls to ensure that key allies and global markets remain reliant on American AI technology rather than inadvertently pushing them into China’s sphere of influence.
US allies signaled a desire for American chips, yet the Biden administration’s export restrictions have inadvertently prevented US companies from selling to trusted trade partners with no history of illicit transfers, potentially pushing them toward alternative suppliers, including China. For its policy to be effective, enforcement will have to align with the realities of the global semiconductor market. While the administration sought to address the rise of informal chip markets and Chinese subsidiaries in Southeast Asia, which were established to circumvent US restrictions, its broad limitation on semiconductor sales has overreached, artificially capping supply to stable markets that demand American goods. US companies depend on international sales to generate capital for vital R&D, ensuring that US technology remains the best in the world. If export controls fail to strike the right balance, they risk undermining US competitiveness in the very industries they are meant to protect.
The US-China Tech War: Retaliation and Countermeasures
In response to US export restrictions, China has accelerated domestic semiconductor production and imposed export controls on minerals like gallium and germanium that are essential components in chip manufacturing. Despite US efforts to curb Huawei’s access to advanced technology, it continues developing AI chips using technology from TSMC, highlighting the challenges of fully isolating China from the global semiconductor supply chain. Despite US Commerce Department assertions that Huawei would not be able to produce 7nm chips for its Mate 60-series smartphones at scale, the company sold at least 30 million units.
American analysts appear to have miscalculated China’s commitment and capabilities. Unfortunately, the US-China AI chip conflict is expected to escalate, with Washington weighing additional restrictions on AI model training data and cloud computing infrastructure to further limit China’s capabilities. This growing tech rivalry is reshaping the global semiconductor landscape, as countries navigate the economic benefits of AI-driven industries against the risks of US sanctions. If the United States is to win the tech race, it cannot build such tall walls that no nation will be able to scale them to acquire American technology.
With 2025 marking a shift in US leadership, the AI chip restriction debate is likely to intensify. Future policy decisions will be pivotal in determining whether the United States can effectively contain China’s AI ambitions while sustaining American leadership in semiconductor innovation.
Global Coordination in AI Governance and Export Controls
To maintain the US global edge, Washington needs to take decisive action to close enforcement loopholes, enhance regulatory oversight, and expand investment in AI and semiconductor innovation. Strengthening international partnerships is critical, as collaboration with allies such as Japan, South Korea, the United Kingdom, and the European Union would help establish a unified AI governance framework that prevents adversarial nations from exploiting regulatory gaps. For this reason, the United States should collaborate with allies to build a functioning regime that does not arbitrarily cut off aligned nations from American technology.
Policymakers should also streamline visa programs to attract top AI talent, increase investment in R&D, and reinforce cybersecurity to counter China’s AI-driven cyber warfare capabilities. In addition, promoting privacy-preserving AI technologies and working toward a global AI ethics consortium would position US AI models as the preferred alternative to authoritarian-controlled systems like DeepSeek.
The urgency is clear. It is essential for the United States to lead AI innovation, secure a technological edge, and ensure that AI is open and unrestricted enough to allow for human flourishing and is not used for repression. This can only be done in tandem with global allies. The AI Diffusion IFR arbitrarily selected 18 countries and leaves well over 100 countries, including North Atlantic Treaty Organization allies, under trade restrictions that will not affect China’s access to these components. The US export control response will have to be targeted and unified to be effective.
Closing Regulatory Loopholes and Strengthening Enforcement Mechanisms
Weak enforcement and gaps in export control regulations allow adversarial nations to access and exploit US technologies, making them nearly impossible to reclaim once transferred. The United States should strengthen screening processes, improve cooperation between regulatory agencies and private sector stakeholders, and increase oversight to prevent illicit technology transfers. A more aggressive approach to compliance enforcement is necessary to protect American technological leadership. But these restrictions cannot be so limiting that they end the very leadership essential for success.
Entity Listings and Their Impact on Tech Competition
The Trump administration’s 2019 decision to place a number of Chinese AI and surveillance firms on the Entity List—including Huawei, Hikvision, SenseTime, and Megvii—marked a pivotal moment in US-China tech relations. While Huawei was added in May 2019 on national security grounds, the October 2019 designations of several AI and surveillance firms were the first instances where the US imposed export restrictions on Chinese entities explicitly over human rights abuses—in this case, for the companies’ roles in surveillance and repression in the Uyghur region.
By cutting off these entities from US-made semiconductors, software, and research partnerships, the sanctions disrupted global supply chains and pressured Chinese firms to find or develop alternative sources of advanced technology.
Beyond Huawei, the broader restrictions signaled a strategic US effort to curb China’s access to critical technologies, particularly in AI, semiconductors, and surveillance infrastructure. In response, China accelerated domestic initiatives in chip production, AI development, and telecommunications to reduce reliance on foreign inputs. As Washington continues to expand export controls, Beijing has enacted retaliatory measures, intensifying the ongoing tech and trade standoff between the two superpowers.
China’s AI-Powered Repression and the Case for Stronger Controls
Strict enforcement of export controls is essential for holding accountable those who misuse technology for repression and human rights abuses. In China, AI has been deployed extensively for mass surveillance, censorship, and political repression—particularly in the Uyghur region. AI-driven systems have facilitated the detention and monitoring of ethnic minorities, notably Uyghurs, based on predictive policing and behavior analysis.
China’s surveillance apparatus goes beyond observation to encompass behavioral control on a national scale. Investigations have revealed that Chinese companies such as BGI Group (formerly known as the Beijing Genomics Institute) have collected genetic data through prenatal tests. An investigation indicated that BGI’s tests were developed in collaboration with the Chinese military. This raised concerns China may use the data for population profiling and military research.
In response to these developments, the US Department of Commerce added China’s Academy of Military Medical Sciences and its affiliates to the Entity List in 2021. These entities were sanctioned for their involvement in developing biotechnology with potential military applications, including “brain-control weaponry”—a term used in the Commerce Department’s justification amid growing concern over human rights abuses targeting Uyghurs and Tibetans.
To address these threats and prevent the use of AI in surveillance and authoritarian governance, the United States has implemented stricter export controls on AI and biotechnology. The Biden administration has played a key role in advancing these measures to limit the global spread of tools enabling digital repression and social manipulation.
Economic Deterrence Against AI-Driven Repression
The United States should impose financial sanctions and trade penalties on companies that knowingly facilitate China’s AI-driven repression or its use of AI for military applications. It should also place restrictions on US investment in Chinese AI and semiconductor firms to prevent American capital from fueling China’s technological advancements.
Such constraints are not without precedent. The CHIPS Act includes a “guardrails provision” that restricts semiconductor manufacturers that receive federal grants from materially expanding their advanced chip operations in China for 10 years. While companies may continue producing legacy chips, the law discourages reliance on China for high-end semiconductor manufacturing. As long as China continues to use advanced technologies to suppress its population and collect data on other nations, the United States should work to keep those technologies from the Communist regime.
China’s Retaliation and US Countermeasures in the AI and Semiconductor Race
In response to US restrictions on AI, semiconductors, and surveillance technologies, China has accelerated domestic semiconductor production and AI research to reduce reliance on foreign technology. Beijing’s Made in China 2025 initiative and its Dual Circulation strategy aim to build a self-sufficient high-tech ecosystem, ensuring technological independence from Western suppliers.
To counter US export controls, China has also leveraged its dominance in critical raw materials, imposing export restrictions on rare earth metals essential for semiconductor manufacturing. In July 2023, Beijing announced restrictions on gallium, germanium, antimony, and other superhard materials, which are key components in high-performance computing and AI chip production. These measures highlighted China’s dominance in critical supply chains and further escalated the technological standoff between the two nations.
To curb China’s military AI advancements, the United States has responded with sweeping export controls, restricting semiconductor manufacturing tools and high-bandwidth memory chips essential for AI processors. As both nations implement countermeasures, the US-China technological dispute continues to intensify, reinforcing the need for long-term, robust enforcement measures to secure technology and supply chains against geopolitical disruptions.
Strengthening Enforcement Mechanisms and Intellectual Property Protection
Beyond strategically tightening regulations, the United States should significantly strengthen enforcement mechanisms to ensure compliance with AI export controls. This requires increasing penalties for violations, enhancing regulatory agencies’ ability to monitor and enforce compliance, and fostering greater collaboration between government agencies and the private sector.
Intellectual property (IP) theft remains a critical issue, with China accused of widespread AI-related IP theft. To combat this, the United States should increase funding for enforcement agencies such as the Federal Bureau of Investigation and the Justice Department while working with international partners to establish global standards for IP protection in AI.
Boosting Investment in Research and Development
Even with a streamlined and focused export control regime, policymakers should assume that some technology will flow to China. To maintain its competitive edge, the United States needs to out-innovate China by significantly increasing R&D. While the US has historically led AI innovation, China’s massive state-backed investments in AI research and semiconductor development have narrowed the gap. To stay ahead, the US tech sector should continue fostering innovation while also implementing strict cybersecurity measures to prevent technology theft by foreign adversaries.
The Trump administration, which had prioritized government efficiency, should extend that focus to federal research agencies. The White House Office of Science and Technology Policy should collaborate with the National Science Foundation, the Department of Energy’s National Labs, and other research agencies to streamline basic research efforts. By fostering public-private partnerships, the US can continue to invent and develop world-leading technologies that reinforce its technological supremacy.
International Collaboration on AI Governance, Export Controls, and Ethical Standards
The United States cannot address global AI competition alone. As AI increasingly influences economies, security, and societal structures worldwide, the US and its allies should strengthen international collaboration to establish unified policies on AI governance and export controls and ensure that democratic values shape AI’s future.
Dario Amodei, AI researcher and cofounder of Anthropic, underscores the importance of collaborating among a coalition of democracies to maintain a strategic advantage in AI. He advocates for an “entente strategy,” in which allied nations “gain a clear advantage (even just a temporary one) on powerful AI by securing its supply chain, scaling quickly, and blocking or delaying adversaries’ access to key resources like chips and semiconductor equipment.” Additionally, he suggests that democracies can leverage AI both as “the stick” for military deterrence and “the carrot” by offering AI-driven economic benefits to nations that align with democratic AI principles.
By fostering international cooperation on AI governance, export controls, and ethical standards, the US and its allies can shape AI as a tool to sustain global stability, technological advancement, and the reinforcement of democratic values.
The Future of AI Leadership
The United States should take immediate action to close regulatory loopholes, strengthen enforcement measures, and improve coordination with allies. Enhancing intelligence sharing to track entities attempting to evade restrictions, increasing funding for investigative units monitoring export compliance, and mandating post-shipment verification for high-risk AI and semiconductor exports to China are all necessary steps to reinforce national security.
In addition to enforcement, this challenge should serve as a wake-up call to the American tech sector. The race for technological superiority is no longer just a competition—it is a battle for economic and military dominance. The United States should double down on investments in semiconductor manufacturing, AI research, and next-generation computing technologies. Silicon Valley, government agencies, and academia will need to work together to accelerate research and development efforts and prevent dependency on adversarial nations for critical technologies.
The time to act is now. The United States should lead the future of AI innovation, safeguard technological dominance, and ensure that AI serves democratic values rather than authoritarian control.