US Department of Commerce Rescinds Biden AI Chip Export Rule Shifting Toward Negotiations

The U.S. Department of Commerce (DOC) has officially rescinded the Biden administration’s Artificial Intelligence Diffusion Rule just days before it was set to take effect on May 15, 2025. This rule, introduced in January, aimed to impose the first-ever limits on exporting U.S.-made AI chips to numerous countries while strengthening existing export controls.

Under the Biden-era regulation, countries were categorized into three tiers with varying export restrictions: Tier 1 countries like Japan and South Korea faced no restrictions; Tier 2 countries such as Mexico and Portugal would have encountered chip export limits for the first time; and Tier 3 countries, including China and Russia, would have experienced tightened controls.

The DOC now plans to replace this tiered approach with a strategy focused on direct negotiations with foreign governments rather than broad, blanket restrictions. This shift aims to balance protecting American AI technology from adversaries while maintaining strategic partnerships with trusted countries.

In the interim, the DOC issued guidance reminding companies that using Huawei’s Ascend AI chips anywhere violates U.S. export rules, warned about risks of U.S. AI chips being used to train AI models in China, and recommended measures to protect chip supply chains from diversion tactics.

Jeffrey Kessler, U.S. Secretary of Commerce for Industry and Security, emphasized the Trump administration’s intent to pursue an inclusive strategy with trusted foreign partners to keep advanced AI technology out of adversaries’ hands, while rejecting the Biden administration’s approach as counterproductive.

Implications for AI Technology and Global Supply Chains

The rescission of the AI Diffusion Rule signals a significant shift in how the U.S. government intends to regulate the export of critical AI technologies. By moving away from broad export restrictions toward targeted negotiations, the U.S. aims to better manage geopolitical risks while supporting innovation and collaboration with allied nations.

This approach also reflects the complexities of securing semiconductor supply chains amid rising global demand for AI chips. Companies must remain vigilant about compliance with export controls and proactive in protecting their technology from diversion or unauthorized use, especially in sensitive regions.

For businesses and policymakers, staying informed about evolving regulations and government strategies is critical to navigating the AI technology landscape effectively and safeguarding intellectual property.