Just days before its planned rollout, the U.S. Department of Commerce (DOC) scrapped the AI Diffusion Rule set by the Biden Administration. This rule, unveiled in January by President Biden, would have imposed fresh export limits on American-made AI chips while strengthening existing controls.
On Tuesday, the DOC directed its staff to stop enforcing the regulation. Instead of broad restrictions, the department is now looking to negotiate directly with individual nations—a move reported by Bloomberg that hints at a more flexible and situational strategy.
The original rule had divided countries into three tiers. Tier 1 nations like Japan and South Korea would have had unrestricted access, while Tier 2 countries including Mexico and Portugal faced new limits on chip exports. For Tier 3 nations—most notably China and Russia—the restrictions were set to be even tighter.
In the absence of the new regulation, the DOC reminded companies of U.S. export laws, specifically noting that using Huawei’s Ascend AI chips on a global scale is against these laws. They also warned of the danger that U.S. AI chip technology could end up fuelling AI model development in China, urging firms to take steps to keep supply chains secure.
U.S. Secretary of Commerce for Industry and Security, Jeffery Kessler, commented that the Trump Administration would pursue a bold, inclusive strategy to advance American AI technology alongside trusted partners, while keeping critical tech away from adversaries. His sharp criticism of the Biden approach as “ill-conceived and counterproductive” underscores a clear policy shift.
