In recent days, the Biden administration’s reliance on export controls to curb China’s AI advancements has come under increasing scrutiny, particularly following the release of China’s DeepSeek R1 chatbot. This development raises concerns that prior U.S. restrictions have failed to slow China’s progress while potentially undermining U.S. global competitiveness in AI hardware and computing ecosystems. President Trump’s early actions—rescinding Biden’s AI executive order and emphasizing innovation over risk mitigation—signal a shift away from restrictive policies toward a more pro-innovation, market-driven approach.

In its final days, the Biden administration issued an interim final rule seeking to “regulate the global diffusion” of AI by imposing export licensing restrictions on advanced chips to 150 “middle-tier” countries, while maintaining existing embargoes on China, Russia, and Iran. The rule was widely viewed as an acknowledgment that previous AI export controls, dating back to 2022, had failed to fully prevent China’s access to AI-enabling technologies through third parties. Critics argue that these restrictions will reduce global demand for U.S. chips and incentivize non-U.S. computing ecosystems, weakening America’s long-term AI leadership rather than protecting national security.

Some have called DeepSeek R1’s recent emergence a “Sputnik moment,” highlighting the inadequacy of past U.S. controls and reinforcing calls among some quarters for a strategic overhaul. AI and crypto advisor to President Trump, David Sacks, has framed the chatbot’s release as evidence that Biden’s policies constrained American AI companies without effectively restricting China’s advancements.

Adding to these concerns, DeepSeek’s rapid rise has also triggered significant international regulatory scrutiny. Italy’s data protection authority, the Garante, has formally demanded explanations on how DeepSeek handles Italian users’ personal data, following accusations that its privacy policy violates multiple provisions of the EU General Data Protection Regulation (GDPR). Consumer advocacy groups argue that DeepSeek lacks transparency regarding data retention, profiling, and user rights, while also storing user data in China, raising potential security risks.

Notably, the White House has also begun reviewing DeepSeek over possible national security threats, echoing past scrutiny faced by Chinese tech firms like TikTok. Indeed, Sacks acknowledged evidence that DeepSeek improperly used data from U.S. company models to train its own, stating that leading U.S. AI companies would take further steps to prevent that practice going forward. This aligns with the Trump administration’s broader economic philosophy, which favors deregulation and private-sector empowerment over government-imposed constraints.

At this point, we believe that Trump’s approach to AI export controls may include: (1) repealing or significantly revising Biden-era AI restrictions to avoid isolating U.S. firms from global markets, (2) prioritizing domestic AI and semiconductor growth through deregulation and incentives, (3) refining export control enforcement to focus on targeted national security threats rather than broad-based restrictions, and (4) recalibrating international AI coordination to ensure U.S. competitiveness rather than emphasizing strict regulatory alignment with allies.

This shift could accelerate AI innovation in the U.S., but it also raises concerns about how to balance national security with economic competitiveness. If AI export controls are loosened too aggressively, China may find easier pathways to advanced AI technologies. Additionally, the divergence between the U.S.’s deregulated AI approach and the EU’s AI Act, which prioritizes stringent governance and risk mitigation, may create regulatory challenges for U.S. companies operating in international markets.

The Trump administration’s AI strategy marks a decisive departure from Biden’s risk-focused policies, opting instead for a more aggressive push to strengthen U.S. AI dominance through industry-led growth. While this shift may create opportunities for American companies, it also requires careful navigation of global regulatory landscapes and national security considerations.