Why Trump’s Reversal on AI Chip Export Rules Could Be the Right Call

As the global race for artificial intelligence supremacy intensifies, the United States continues to grapple with a central question: how to safeguard its technological edge while confronting the rise of China. For years, Washington has leaned heavily on export controls—particularly targeting advanced AI chips—in a bid to slow China’s progress. But the reality on the ground tells a different story: the controls have proven porous, and Chinese companies continue to access high-powered semiconductors via intermediaries and offshore data centers.

In one of its final regulatory moves, the Biden administration proposed a sweeping global licensing regime designed to tighten these controls. Yet critics argue the plan was unworkably complex, potentially alienating allies and overwhelming the very agencies meant to enforce it. On May 7th, the Trump administration announced it would abandon those rules in favor of a simpler, more pragmatic approach—a move that may prove more effective in both geopolitical and economic terms.

The Flaws in Biden’s Strategy

The Biden-era plan sought to create a global net that would exempt close allies like Japan and Germany while blocking direct sales to China and Russia. However, over 120 “middle” countries—including strategic players like India, Singapore, and the UAE—would have been caught in a dense web of licensing requirements. This would have burdened legitimate buyers, strained diplomatic ties, and created enforcement challenges the U.S. Bureau of Industry and Security (BIS), already under-resourced, could not realistically manage.

Moreover, the plan failed to account for the adaptability of global supply chains. While advanced lithography machines, such as ASML’s EUV systems, are bulky and easy to track, AI chips are small, widely distributed, and sold in the millions. For example, Nvidia—America’s AI chip leader—expects to sell over 6 million units in 2025 alone.

Leaky Controls and Unintended Consequences

Export controls are not inherently flawed, but their scope and enforcement matter. Narrow, targeted restrictions—such as the ban on EUV machines—have proven effective in slowing China’s manufacturing capabilities. In contrast, broad restrictions on AI chips invite circumvention and fuel parallel markets. Ironically, U.S. pressure has accelerated China’s efforts toward chip self-sufficiency. Firms like Huawei have begun to unveil AI systems that, on some benchmarks, rival Nvidia’s offerings.

The bigger risk lies in how overregulation might alienate neutral countries. For many of these markets, complex U.S. rules could become an incentive to turn to Chinese suppliers—not out of preference, but convenience. If American chip access becomes a geopolitical bargaining chip rather than a stable, rules-based framework, U.S. companies could lose both market share and international trust.

Rethinking the Strategy

Rather than expanding export controls to the point of diminishing returns, the U.S. would be better served by focusing on maintaining its innovation leadership. This includes investing in domestic R&D, deepening alliances with trusted partners, and ensuring that American firms remain reliable suppliers in the global tech ecosystem.

Controls may buy time—but they are not a long-term strategy. If the U.S. is to stay ahead in the AI race, it will need more than restrictions. It will need vision, agility, and a coalition of like-minded nations willing to advance a shared technological future.

Jorge Gutierrez Guillen

Sources: U.S. Bureau of Industry and Security – Nvidia Corporation – Investor Relations & Newsroom – The Economist

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