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The Trump administration is easing off its tough-on-China approach to technology export controls as it searches for leverage in trade talks and looks to propel US dominance on artificial intelligence.
The administration is debating whether to scrap its plans to replace a Biden-era rule that set up a global framework for export controls designed to prevent US-designed AI technology like chips from flowing to China or Russia, two industry sources told Semafor.
That’s not the only sign of a less hawkish approach to AI policy; the administration’s new AI plan called for more open-source and open-weight models despite concerns that they could benefit Beijing. And US officials recently approved the sale of certain semiconductors produced by Nvidia to China, drawing bipartisan scrutiny on Capitol Hill.
“I think it’s a mistake,” Sen. John Kennedy, R-La., told Semafor of the administration’s approval of selling those chips. “Because all they’re doing is helping China. I just think it’s a huge mistake. And I’m not sure, I think some CEOs talked the president into it. I hope he turns out to be right, but I wouldn’t have done it.”
The broader shift on export controls reflects Trump’s conflicting priorities as he tries to cut new trade deals and keep his tough-on-China reputation. The president faces political risk from any perception that he’s going soft on Beijing, and Democrats are trying to capitalize on that vulnerability.
But as the US and China continue trade talks, some degree of horse-trading is all but expected.
Senate Democrats, including Minority Leader Chuck Schumer, sent a letter to Commerce Secretary Howard Lutnick this week arguing that chip export curbs are needed to maintain the US edge in AI computing capability.
“What I see out in plain view is the president is helping a giant corporation make big money by moving chips to China instead of prioritizing the work done here in the United States,” Sen. Elizabeth Warren, D-Mass., told Semafor.
The Trump administration has not made a final decision on whether to replace the AI diffusion rule that it vowed in May to swap out, and its broader strategy is still a source of debate within the White House and Commerce Department, both sources told Semafor.
“President Trump and his administration remain committed to making the United States a global leader in AI, while also ensuring our most advanced technology does not fall into the hands of our adversaries,” White House spokesman Kush Desai said in a statement to Semafor. “These goals are not mutually exclusive, and we look forward to working with industry leaders to accomplish both these missions.”
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The Biden administration greenlit Nvidia’s H20 chips for export to China under an aggressive export control regime. Trump moved to tighten those curbs in the spring, but then assured the company that those shipments would be approved. Similar assurances were given to tech firm AMD, as Bloomberg reported.
Some lawmakers offered more nuanced assessments of Trump’s move. Sen. Todd Young, R-Ind., a leading technology policy voice, said that blocking the sale of H20 chips — which are not Nvidia’s most advanced product — could actually cede ground to Chinese companies.
“On one hand, we don’t want our chief adversary to have access to leading-edge, frontier chips. Even if these aren’t the most leading-edge chips, they’re still close,” Young told Semafor.
“On the other hand,” Young added, “you don’t want to create an atmosphere in which Huawei steps into the breach – or others — and makes its own stuff.”
Morgan and Burgess’ View
The collective moves on export controls may signal that China hawks within the administration are taking a backseat to more tech-industry-focused advisers.
It would be a notable, if not terribly surprising, turn after Trump took office promising a tougher approach to Beijing — but also, new policies that are more favorable to AI companies on a global scale.
“It certainly seems — at the moment, at least — that the tech side has the upper hand,” said Geoffrey Gertz, senior fellow at the Center for a New American Security.
Michael Sobolik, an expert at the Hudson Institute who signed onto a letter raising concerns to Lutnick about the Nvidia move, also argued to Semafor that the administration was effectively capitulating to Silicon Valley.
“For decades, Washington’s China policy ran through Wall Street. That, predictably, resulted in American companies enriching the Chinese Communist Party and, in some cases, equipping the People’s Liberation Army,” he said. “Now, just as elected officials have begun to reorient America’s approach to Beijing on a more competitive footing, Silicon Valley tech giants are demanding a veto.”
Dispensing with a new AI diffusion rule would also offer Trump more flexibility in trade talks with China that are a top priority for Treasury Secretary Scott Bessent, despite the administration’s touting of agreements with Indonesia, the EU, and other countries.
Room for Disagreement
Some Republicans argued the administration isn’t giving the Chinese access to the most sophisticated technology and that makes it more palatable.
“The question is: Do you force them to create their own capabilities faster than what they otherwise would? Or do you provide them with chips that aren’t top of the line … but only sell the ones that are second level, which is really what this is about,” said Sen. Mike Rounds, R-S.D.
“I can’t imagine that we would do anything that would give [China] an advantage with regard to advanced chips,” he added.
Notable
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Trump’s plan to allow advanced chip exports to the UAE is in limbo as officials raise national security concerns about China potentially gaining access to them, The Wall Street Journal reported.
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Huawei debuted an AI computing system over the weekend that could rival Nvidia’s, Reuters reported.
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Trump’s decision to revoke the Biden-era diffusion rule represented a win for Europe, Politico wrote.
