BY ROBERT KNAKE
This week, the New York Times put out a long news analysis on the hopes and dreams of AI companies for less regulation in the Trump administration. Yet, while the early signs may point in a pro-industry direction, don’t be surprised if the Trump Administration’s policies do not end up in about the same place the Biden Administration left off.
While the Administration will likely fully revoke all vestiges of the control regime the Biden Administration was working to put into place until its last days, what replaces it may be wholly different in tone and tenor but drive at the same policy outcomes.
That is because the Biden AI team took a light touch approach that never was (or would have been) as onerous as Silicon Valley seems to believe and because the thrust of that approach was squarely aimed at making sure that AI increases our national security vis-à-vis China.
In national security, all gains are relative. While we want to boost the ability of US companies to dominate the AI era we also want to hinder the ability of our adversaries (mainly China) to do the same. If the administration takes an action that causes a major hindrance to Chinese AI developers it is okay if it also causes a minor hindrance to US AI developers. On a net basis, we come out ahead.
There are strong indications that the Trump team takes that view. While the President moved quickly on day one to meet the demand to rescind the Biden Administration’s policy on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (EO 14110), two days later EO 14179 laid out a process for reviewing the actions taken by agencies pursuant to the Biden EO. That process is still ongoing.
While the target for revising key OMB policies of 60 days set in EO 14179 was ambitious, it is also telling that that deadline has come and gone. That means, at a minimum, there is some debate about whether simply eliminating barriers is in the national security interest.
Two areas, at minimum, call for a more nuanced approach to constrain Chinese AI development without doing equal or more harm to the US AI industry: keeping advanced chipsets out of Chinese hands and keeping Chinese AI developers from using these chipsets in US cloud infrastructure. Both are policy areas where industry should seek to shape the outcome rather than attempt to kill all together.
The “Framework for Artificial Intelligence Diffusion” was rushed out the door in the final weeks on the Biden Administration. I’d argue that in its current form with its arcane and archaic system of quotas and licenses, it would cede AI data center development outside the United States to Huawei – it would in effect create the same outcome that Huawei achieved on 5G only this time they would do so when US companies have a clearly superior product.
I expect the Trump team will fully strike the existing framework but replace it with something streamlined for industry that will maintain the same goal of restricting chip exports to China and preventing Chinese front companies from acquiring them covertly.
There is of course little point in keeping chips out of Chinese AI company hands if they can simply rent time to train their models on those same chips at cloud providers. Thus, I expect the Trump team will resurrect and revise the existing Know Your Customer (KYC) rules that the first Trump Administration set into motion with Executive Order 13984 back in January of 2026.
The Biden Administration kept that EO in place and issued a proposed rule in January of 2024, which has yet to go into effect. While the proposed rule did not get a favorable review from industry, a narrower set of requirements for a narrower set of customers (those using the most advanced chips above certain thresholds for extended periods) should not duly restrain industry.
If getting to Artificial General Intelligence (AGI) faster than China is a national security imperative, then companies trying to build AGI should at least undergo the same level of rigor required to get a Netflix account (a valid credit card) and buy beer (a driver’s license) when they spin up a cluster of NVIDIA’s latest chips. (more to come on this in a future post).
Of course, some in industry would prefer no rules at all – that is (likely) in the interest of investors. But smart regulation aimed at slowing China is most definitely in the national security interest. And I bet the China Hawks in this Administration win the debate over the AI bulls.