Trump's AI Chip Policy Shift: Impact on China Trade

Trump’s AI Chip Policy Shift: A Targeted Approach in US-China Tech Rivalry

The Trump administration’s recent policy shift on artificial-intelligence (AI) chips has sparked renewed tension in the ongoing US-China tech rivalry. While the move revokes certain Biden-era regulations, analysts suggest it represents a more strategic and targeted approach to curbing China’s technological advancement rather than a relaxation of restrictions.

The policy change, which rescinds the AI Diffusion Rule established during the Biden administration, focuses specifically on China by issuing advisories that the use of Chinese chips violates US export-control regulations. Additionally, the US Bureau of Industry and Security (BIS) has restricted the use of US chips for training AI models in China, a move that has drawn protests and warnings from Beijing.

Impact on Trade Negotiations

The shift in policy comes at a delicate time, as the world’s two largest economies had recently agreed to a 90-day rollback of large-scale tariffs. Analysts warn that the increased technology tensions could introduce uncertainty into these ongoing trade negotiations, potentially undermining the progress made in easing economic friction.

“This is not a step back from restricting China’s tech ambitions,” said Joanne Lin, a senior fellow at ISEAS – Yusof Ishak Institute in Singapore. “Instead, it’s a more precise strategy that uses trade tools and targeted controls to address specific areas of concern.” Lin added that Beijing may view these limitations as a direct threat to its long-term development objectives, further complicating diplomatic efforts.

US Strategy and China’s Response

The US strategy appears to be aimed at maintaining its technological dominance while avoiding broad restrictions that could harm global supply chains. By focusing on specific technologies and their applications, Washington hopes to limit China’s ability to leverage AI for military or surveillance purposes without stifling innovation entirely.

China, however, has responded with criticism, arguing that the new policies violate international trade rules and hinder cooperation. The restrictions on US chips for AI training in China have been particularly contentious, as they directly impact Chinese tech companies’ ability to develop advanced AI models.

Future Implications

The long-term implications of this policy shift remain unclear, but experts agree that it signals a more aggressive stance in the US-China tech competition. As both nations continue to invest heavily in AI, the battle for technological supremacy is likely to intensify, with potential repercussions for global trade and geopolitical stability.

“We’re entering a new phase of tech diplomacy,” said Lin. “The question is whether this targeted approach will succeed in curbing China’s ambitions or simply escalate tensions further.”