The United States is currently holding back on major new trade restrictions against Chinese AI firms, opting for a more measured approach.
At the heart of this move is Washington's decision to delay adding the prominent Chinese AI developer DeepSeek to the Commerce Department's Entity List, a trade blacklist. This restraint is a direct consequence of the May summit between President Trump and President Xi, which opened a door for dialogue on managing AI-related risks. As a key gesture, the U.S. also suspended its 'Affiliates Rule' for one year. This rule would have significantly expanded the number of Chinese companies subject to restrictions.
However, this pause shouldn't be mistaken for a softening stance. It's better understood as a strategic shift toward 'managed competition'. The U.S. is applying pressure through other, more targeted channels. First, the Pentagon recently expanded its list of 'Chinese military companies,' effectively blocking them from U.S. defense contracts. Second, the Bureau of Industry and Security (BIS) issued new guidance to stop advanced Nvidia AI chips from reaching Chinese firms operating outside of China, closing a critical loophole. These actions create pressure without triggering the major diplomatic fallout that mass blacklisting would cause.
This calibrated strategy is also evident in the AI safety domain. The U.S. government recently ordered the American AI company Anthropic to restrict foreign access to its most powerful models on national security grounds. This demonstrates Washington's ability to take precise, unilateral action on specific risks without escalating the broader conflict with China. It serves as a surgical tool, reducing the need for the blunt instrument of the Entity List.
The context for DeepSeek is complex. For months, allegations have surfaced, including claims that the company illicitly trained its models on banned Nvidia chips and was involved in GPU smuggling. While these accusations have increased scrutiny, the lack of definitive, public evidence makes an immediate blacklisting politically risky, especially while diplomatic talks about AI 'guardrails' are active. By holding back, the U.S. keeps the powerful threat of the Entity List as leverage for negotiations.
- Entity List: A trade blacklist maintained by the U.S. Department of Commerce. Companies on this list are restricted from receiving certain U.S. technologies and goods.
- BIS (Bureau of Industry and Security): The agency within the U.S. Commerce Department responsible for administering and enforcing export controls.
- Affiliates Rule: A regulation that expands export controls to foreign affiliates of companies already on the Entity List, based on ownership stakes.