Trump admin scraps Biden-era AI chip export curbs, vows new global strategy to counter China
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In a sweeping reversal of U.S. export policy on artificial intelligence technology, the Trump administration has rescinded a Biden-era rule that was set to take effect Thursday, which would have placed strict caps on the number of advanced AI chips exported to dozens of countries without prior federal approval.The move, confirmed by the Department of Commerce on Tuesday, comes after a week of strong signals from the Trump administration that it planned to significantly alter or eliminate the rule.The now-withdrawn regulation — officially called the Framework for Artificial Intelligence Diffusion — was issued in January during the final days of President Joe Biden's term. It represented a culmination of the previous administration's four-year strategy to limit China's access to high-performance chips and prevent their use in military applications.'These new requirements would have stifled American innovation and saddled companies with burdensome new regulatory requirements,' the Commerce Department said in its updated guidance.The Biden rule divided the world into a three-tier system. Seventeen countries — including all NATO members, Japan, and Taiwan — were classified in the top tier and faced no export caps.A second tier of over 120 countries would have faced limits on chip quantities, while adversarial nations like China, Russia, Iran, and North Korea fell into the third tier and were effectively blocked from receiving U.S.-made AI chips.However, officials in the Trump administration argued the tier-based framework was both 'unworkable' and 'bureaucratic.' According to a Commerce Department spokeswoman quoted in a Reuters report last week, the rule was deemed 'unenforceable' and would be replaced by a 'much simpler rule that unleashes American innovation and ensures American AI dominance.'Commerce Undersecretary Jeffery Kessler confirmed on Tuesday that the Trump administration is developing a replacement strategy focused on a global licensing regime that would facilitate AI technology exports to trusted countries through direct government-to-government agreements.'The Trump Administration will pursue a bold, inclusive strategy to share American AI technology with trusted partners around the world, while keeping the technology out of the hands of our adversaries,' Kessler said.While the Biden-era framework aimed to thread a needle between national security and economic competitiveness, critics within the current administration said it risked hurting American companies in rapidly growing global AI markets. Major chip manufacturers such as Nvidia could stand to benefit significantly from the rollback, with shares of the company rising 3% on Wednesday after reports of the rule's imminent withdrawal, before dipping slightly in after-hours trading.The Biden export control regime was part of a broader campaign to prevent U.S.-developed AI chips — a critical input for military systems, surveillance technologies, and advanced computing — from strengthening China's capabilities. However, Trump officials now suggest that export oversight can be better managed through diplomatic channels, rather than rigid global quotas.Despite the rollback, Commerce officials emphasised that restrictions will remain in place for adversarial states such as China and Russia, with a new rule currently in the works. The timeline for unveiling the new policy remains uncertain, though discussions on a licensing-based framework are said to be ongoing, according to sources cited by Reuters.
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