Trump Administration Working on AI Rule to Curb China’s Remote Access to Chips

Soon after President Donald Trump began his second term in office in 2025, the White House announced it would undo export controls the Biden administration had imposed on advanced AI chips to slow the technical progress of geopolitical rivals like China. In recent weeks, a small group within the Department of Commerce has been working on a slimmed-down replacement for the Biden-era provision, known as the AI diffusion rule, according to four people familiar with the matter.

The new rule from the Trump administration will likely attempt to close a glaring loophole in existing export control policies, according to two of those people: the ability of Chinese AI firms to access advanced chips remotely through data centers abroad in countries including Thailand and Singapore. The Commerce Department’s Bureau of Industry and Security is working on the new rule, which it could share with AI companies and industry trade groups for feedback as early as September, one of the people said.

The Trump administration is formulating the new policy at a moment when it is reckoning with accelerating competition from Chinese AI firms such as Moonshot and DeepSeek that it has accused of exploiting U.S. technologies to train their latest AI models.

If completed, the new rule would represent one of the administration’s first efforts to create a unified policy governing chip exports and stemming the advancement of Chinese AI development. It’s possible the effort could stall. Previous White House attempts to limit the spread of U.S. AI technologies to other countries have fallen short, including a draft of a proposal to regulate AI chip exports, which the administration withdrew in March.

Effectively scrapping the Biden-era AI diffusion rule did not completely end U.S. restrictions on AI chip sales to China. Rules introduced in 2022 still require companies to obtain U.S. government approval before selling China powerful chips used to develop and run AI models. The Biden diffusion rule went further by limiting shipments to many other countries, partly to prevent the smuggling of chips into China through third countries.

Opponents to the Biden rule said it could weaken America’s dominance in semiconductors. A comeback of the rule, even in a different form, is likely to revive those criticisms.

For AI chip companies such as Nvidia, such a policy could reduce sales to overseas data centers serving Chinese customers. Cloud providers and data center operators would also have to spend more screening users and risk losing business. That could affect where data centers are built and whether operators buy American chips or competing products.

Meanwhile, for Chinese AI companies, the rule could make the computing power needed to train their most capable models harder to secure. Many of those models still rely on Nvidia chips for training because few Chinese alternatives can currently match their reliability and performance at scale.

Closing the remote access loophole “would deny Chinese companies access to the most powerful compute,” said Michelle Nie, a visiting fellow with the Center for a New American Security. “That would definitely harm their ambitions to catch up to the latest American AI models.”

In recent months, the Trump administration has sent mixed messages about its plans to create a new AI diffusion policy. In a July oversight hearing with the House Foreign Affairs Committee, Jeffrey Kessler, a Commerce Department undersecretary in charge of the Bureau of Industry and Security, said his department would not propose such a rule modeled on the Biden policy. “I don’t want to replace the diffusion rule because I don’t think the rule is worth replacing,” he said. “It’s a bad rule, and we’re glad that it’s not being enforced.”

Still, Kessler added: “There will be future regulatory action in the area of chips and AI.”

In January 2025, during the waning days of the Biden administration, the Bureau of Industry and Security published its “Framework for Artificial Intelligence Diffusion.” The framework created a system that put limits on the number of chips companies could send to specific countries, dividing up the world into three categories that included the U.S.’s closest partners, countries subject to U.S. arms embargoes and countries that fell in the middle.

The rule encountered widespread industry criticism, with opponents arguing that it was both too broad and too complex. Nvidia published a blog post describing it as “unprecedented and misguided.” In May 2025, the Trump administration announced its intention to rescind the Biden diffusion rule and issue a replacement. Though the administration hasn’t formally scrapped the rule yet, the Commerce Department is not enforcing it while it remains on the books.

While the remaining restrictions largely block direct sales of the most cutting-edge AI chips to China, critics argued that they contained a number of loopholes. In late May 2026, the Bureau of Industry and Security closed one such loophole, releasing new guidance that would enforce license requirements for advanced chips used by overseas subsidiaries of China-headquartered companies.

The remote access loophole, however, remains unresolved. Public awareness of the issue increased in July when Michael Kratsios, director of the White House’s Office of Science and Technology Policy, posted on X that Moonshot was likely training its models by accessing advanced Nvidia chips in Thailand. Kratsios didn’t specify whether the training was happening through third-party data centers. (The Information in July reported that Moonshot partly trained its new Kimi K3 model on Nvidia chips located in China.)

But the question of whether the Commerce Department has the authority to restrict companies from remotely accessing chips remains unsettled. Export controls have traditionally focused on the physical shipment of chips, not companies accessing them remotely through cloud services. “It’s basically widely acknowledged that [the Commerce Department doesn’t] currently have the authority to regulate true remote access,” said Janet Kim, an attorney at Baker McKenzie.

Congress is considering legislation called the Remote Access Security Act that would bolster the Commerce Department’s powers. That act would give the Bureau of Industry and Security explicit authority to block foreign people or companies from accessing controlled items through the internet or cloud computing services. However, its progress has stalled amid uncertainty over its inclusion in the National Defense Authorization Act, an annual bill focused on national security.

“What Congress is trying to do is give [the Commerce Department] the statutory authority to regulate remote access,” said Kim.

Even if Congress doesn’t pass the bill, a new diffusion rule could still address the loophole, according to people familiar with the matter. A previous draft of a Trump administration AI diffusion rule last year would have created a licensing system for AI chip exports to specific countries like Thailand and Malaysia.

As a condition for receiving the chips, data centers and other major chip purchasers would have had to agree to prevent Chinese companies from remotely accessing them, according to a person familiar with the draft. By not strictly requiring a license for remote access, the Commerce Department could potentially sidestep the limitations on its statutory authority.

The new version of the diffusion rule would include know-your-customer checks, ensuring that data center operators know customers’ identities and how they’re using the provided computing services, a different person familiar with the current efforts said.

Despite Kessler’s denial that the Commerce Department would create a replacement rule, the Bureau of Industry and Security published a notice this year that it intends to formally rescind the Biden diffusion rule and “issue new rules for the secure export of advanced AI chips.” The notice listed a projected date of July 2026 for that to take place.