The Biden-era “Export Control Framework for Artificial Intelligence (AI) Diffusion” is officially being rescinded by the Trump administration, which will not enforce the rule from May 15.
A US Commerce Department spokesperson told Investopedia, “The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation.” They continued, “We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance.”
What Did The Original Framework Involve?
- Country-specific caps would be placed on US-origin GPU exports, possibly limiting individual shipments as well as total shipments to any destination based on GPU computational power,
- Shipments of advanced closed-weight AI models that require 1026 computational operations for training would require authorization,
- GPU shipments will not require a license or count towards the caps if their computation power is below or equal to 1,700 of the most advanced GPUs, currently Nvidia’s H100 Tensor Core GPU,
- 18 Tier 1 (T1) countries, covering close allies and semiconductor key players, would be exempt from the law,
- Tier 3 (T3) countries, consisting of countries of concern, would be strictly forbidden from importing US-origin GPUs, and
- Around 120 Tier 2 (T2) countries would be limited in the number of US-origin GPUs they can import, and most shipments would require US authorization.
How Has the Trump Administration Responded to the Biden-Era AI Rule?
Companies like Anthropic supported the Biden-era framework and believed, “maintaining America’s compute advantage through export controls is essential for national security and economic prosperity as powerful new AI systems are developed in the coming years.”
However, many significant chip manufacturers pushed for a repeal and continually criticized the rule for being challenging to manage and detrimental to company revenue and America’s global AI leadership.
Eventually, the White House concurred and, on May 7, announced its plans to rescind the rule.
A TecEx expert noted, “The repeal of the AI Diffusion Framework is not entirely unexpected, given growing pressure from chip manufacturers and Tier 2 nations. Implementing the framework has proven difficult amid today’s complex and interdependent global IT supply chains.” They continued, “We hope any new framework strikes a more effective balance between protecting U.S. strategic interests and supporting global innovation and commerce.”
What Does the Future Hold for American AI Exports?
Bloomberg reported that the Trump administration will rescind the rule and replace it with different restrictions, but there is currently no known timeline. Existing export controls on US-made GPUs will remain in place. According to Reuters, the Trump administration had considered making the controls “stronger but simpler” for some time before the repeal began.
Silicon Angle reported that the Trump administration will completely scrap the complex three-tiered country classifications. Reuters believes the administration may favor”a global licensing regime with government-to-government agreements.” Additionally, the threshold for the exception to licensing could be lowered from the equivalent of 1,700 of Nvidia’s H100 chips to a mere 500.
The move aligns with President Trump’s order for Removing Barriers To American Leadership In Artificial Intelligence, which states, “It is the policy of the United States to sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security.”
President Trump’s Executive Orders Affecting American Artificial Intelligence
Trump notably immediately rescinded Biden’s Executive Order for “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” and shortly thereafter signed an Executive Order for “Removing Barriers To American Leadership In Artificial Intelligence.”
The new order requires the development of an Artificial Intelligence Action plan reflecting the administration’s commitment “to ensuring the United States is the undeniable leader in AI technology.”
So, while the administration will be replacing Biden’s AI rule, it will need to be much less stringent if the US is to achieve its Artificial Intelligence leadership goals.
What Does This Mean for Global AI Tech Trade?
With new and unknown export restrictions incoming, governments worldwide will likely need to individually negotiate with the US to secure continued access to American AI technologies, while also negotiating to balance trade relations and reduce tariffs.
Negotiating Tariffs Alongside Access to AI Technologies
As tariff negotiations are proving lengthy, it’s difficult to know how long negotiations over AI tech may take.
Considering President Trump’s tariff tactics started with a threat of heavy country-specific reciprocal tariffs, reduced to universal 10% tariffs (except for China, Mexico, and Canada), with a 90-day suspension period for negotiations on reciprocal tariffs, perhaps the new AI export controls will follow a similar pattern with a period of reprieve for AI companies to negotiate while planning risk mitigation strategies.
Even once negotiations are complete, access to American GPUs may still be limited or require stringent licensing.
Additionally, Trump has threatened 25% or higher tariffs on semiconductors multiple times, and trade investigations into these goods are ongoing to determine the final rate. So, GPUs may be safe from the AI diffusion rule, but they are not yet safe from tariffs.
Navigate AI Imports and Exports
In times of trade uncertainty, it’s vital to partner with an expert in importing and exporting GPUs and AI technologies.
Even though the Trump administration will repeal the Biden-era AI Rule and simplify the incoming export controls, trade compliance remains vital for successful shipments of GPUs:
- The new government-to-government bilateral trade agreements will need to be understood and complied with to avoid the seizure of your goods or even unknowingly contributing to chip smuggling,
- Importers need to understand ECCN classifications to assess whether export controls apply to their GPU shipments,
- Rules of Origin and Certificates of Origin are critical in determining whether GPU chips consist of US-origin or controlled components, and
- The Bureau of Industry and Security (BIS) will likely require new licenses to authorize shipments and grant exemptions under new export controls.
When you partner with TecEx, we focus on your trade compliance so you can focus on your core business.