The U.S. Commerce Department quietly withdrew a proposed rule on artificial intelligence chip exports on Friday, pulling the regulation from the Office of Information and Regulatory Affairs website just weeks after submitting it for interagency review. The move leaves American AI chip export policy in limbo and signals deepening divisions within the Trump administration over how to balance global competitiveness with national security.
The withdrawn draft, titled “AI Action Plan Implementation,” was circulated to federal agencies on February 26. It would have required foreign nations seeking to import more than 200,000 AI chips to either invest in American data centers or provide security guarantees. Companies requesting up to 100,000 chips would have needed government-to-government assurances before receiving an export license.
The Rule Was Meant to Replace Biden-Era Controls
The proposal was designed to replace a January 2025 regulation from the Biden administration that divided the world into three tiers. Close U.S. allies could receive unlimited AI chips. Most other countries faced strict limits on how many they could import. Nations considered security threats, including China, were blocked from receiving advanced semiconductors entirely.
The Trump administration had pledged to scrap what it called a “burdensome” framework and replace it with a streamlined approach that would reinforce American AI dominance. But sources familiar with the process said the new draft carried “similar complexities” to the Biden version, prompting pushback from within the administration.
Internal Disagreements Led to the Pullback
A former official told reporters that the withdrawal likely reflects differing views within the Trump administration on how to achieve global AI supremacy while addressing national security concerns. One official characterized the proposal as “just a draft that was yet to be finalized,” calling the discussions “mere initial talks” rather than settled policy.
The Commerce Department did not provide a public explanation for pulling the rule. However, the department said it remains committed to “secure exports of the American tech stack” and pointed to recent deals with Saudi Arabia and the United Arab Emirates that involved AI chip exports in exchange for technology investments in the United States.
What This Means for the AI Industry
The withdrawal creates uncertainty for Nvidia, AMD, and other semiconductor manufacturers whose global sales depend on clear export rules. Both companies have lobbied against overly restrictive frameworks that could push international customers toward Chinese alternatives. China’s leading chipmakers are reportedly accelerating production of advanced semiconductors to meet domestic AI demand, adding competitive pressure on American manufacturers.
For AI startups and cloud infrastructure companies, the policy vacuum raises questions about access to computing power in key international markets. Companies building AI products that rely on partnerships with large-scale Nvidia deployments abroad could face delays if export rules remain unsettled for an extended period.
With no replacement regulation currently in place, the semiconductor industry and international partners are watching closely for the administration’s next move. The timing adds another layer of complexity ahead of Nvidia’s GTC conference next week, where CEO Jensen Huang is expected to outline the company’s vision for the next phase of AI infrastructure.
