The Commerce Department on Monday officially rescinded the former Biden administration’s artificial intelligence diffusion rule that would have placed caps on chip sales to most countries around the world.
The Bureau of Industry and Security, in a release published Tuesday, said the Biden-era rule, which was supposed to go into effect Thursday, would “have stifled American innovation and saddled companies with burdensome new regulatory requirements.”
Except for 18 U.S. allies and partners, the sweeping AI diffusion rule established caps on chip sales to all other countries.
It was announced in the last few days of the Biden administration and was the final move in the former administration’s push to prevent AI chips from ending up in the hands of foreign adversaries.
BIS officials were instructed not to enforce the diffusion rule Monday.
“The Trump Administration will pursue a bold, inclusive strategy to American AI technology with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries,” said Jeffrey Kessler, undersecretary of Commerce for Industry and Security.
“At the same time, we reject the Biden Administration’s attempt to impose its own ill-conceived and counterproductive AI policies on the American people,” he added.
David Sacks, the White House AI and crypto czar, said last week Biden’s rule alienated key U.S. allies and overreached on export control authority.
The BIS said it plans to issue a replacement rule in the future.
Several technology companies including Microsoft and Nvida urged Trump to loosen the rule once he was back in office.
At the same, the BIS also announced new guidance to strengthen export controls for overseas AI chips. This included guidance stating the use of Huawai Ascend chips anywhere in the world violates U.S. export controls. Huawai has previously been targeted for the company’s close ties to the Chinese Communist Party.
The BIS also issued guidance to warn about the potential consequences of allowing U.S. AI chips to be “used for training and interference of Chinese AI models,” and information for U.S. companies on how to protect supply chains against diversion tactics.
Concerns spiked over China’s AI development earlier this year, when the Chinese AI company DeepSeek released a high-performing and cheaply built AI model that drew comparisons to OpenAI’s models.
