US Rescinds Biden AI Chip Export Rule Shifts to Negotiation Strategy

The U.S. Department of Commerce (DOC) has formally rescinded the Biden Administration’s Artificial Intelligence Diffusion Rule just days before it was set to take effect on May 15, 2025.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 by former President Joe Biden, aimed to impose export limits on U.S.-made AI chips to various countries for the first time, while strengthening existing restrictions.

The rescission reflects a strategic shift by the DOC, which now plans to replace the rule with a new framework focused on direct negotiations with foreign governments rather than broad, tiered export restrictions. According to Bloomberg reporting, this approach aims to tailor controls more precisely to geopolitical and security considerations.

Under the Biden-era rule, countries were divided into three tiers with varying export controls: Tier 1 countries like Japan and South Korea faced no restrictions; Tier 2 countries such as Mexico and Portugal would have seen new chip export limits; and Tier 3 countries including China and Russia would have faced tightened controls.

In place of the rescinded regulation, the DOC issued guidance reminding companies that using Huawei’s Ascend AI chips anywhere violates U.S. export rules.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

Jeffery Kessler, U.S. Secretary of Commerce for Industry and Security, emphasized the Trump Administration’s intent to pursue a bold and inclusive AI technology strategy with trusted allies, while preventing adversaries from accessing sensitive technology. He criticized the Biden Administration’s policy as ill-conceived and counterproductive.

Broader Implications for AI Technology and Export Controls

This policy reversal highlights the complexities of regulating AI technology exports amid geopolitical tensions. The original tiered approach sought to balance innovation leadership with national security by restricting AI chip access to certain countries. However, the shift toward direct negotiations may allow for more nuanced and flexible controls that adapt to evolving global dynamics.

For businesses and governments, understanding these regulatory changes is critical to managing supply chains, ensuring compliance, and protecting intellectual property. The DOC’s guidance on avoiding unauthorized use of AI chips and securing supply chains underscores ongoing risks in the global AI ecosystem.

As AI technologies continue to advance rapidly, export policies will remain a key lever in shaping international cooperation and competition. Stakeholders must stay informed and agile to navigate this evolving landscape effectively.