TO WIN THE AI RACE, THE AI DIFFUSION RULE MUST GO The Trump administration has announced its intention to repeal the Biden administration’s AI Diffusion Rule. As the Commerce Department’s Bureau of Industry and Security (BIS) confirmed in a statement yesterday: “The Biden AI rule is overly complex, overly bureaucratic, and would stymie American innovation. We will be replacing it with a much simpler rule that unleashes American innovation and ensures American AI dominance.” This is an excellent decision by Secretary of Commerce @howardlutnick and Under Secretary of BIS Jeff Kessler. There were several major problems with the Biden Diffusion Rule: 1. Overreach of Export Control Authority First, the rule marked an unprecedented—and arguably unlawful—expansion of export control authority. Under the Export Control Reform Act (ECRA) of 2018, the President is empowered to restrict exports of dual-use technologies that have both civilian and military applications. That authority has been used to restrict the sale of advanced semiconductors to China, a policy with broad bipartisan support. But the Diffusion Rule went significantly further. It required nearly all global sales of high-end GPUs—even to trusted allies—to obtain export licenses or fit into a narrow set of license exemptions. This forced much of the global data center and AI infrastructure industry to seek approval from Washington, creating a bottleneck that chilled legitimate, non-sensitive commerce. 2. Bureaucratic Allocation of Compute The rule imposed detailed numerical caps on how many chips and how much computing power foreign entities could acquire and operate. This was a radical departure from market-based allocation principles, placing the U.S. government in the position of rationing compute power globally. It effectively turned Washington into a central planner for the global AI industry. 3. Alienation of U.S. Allies The rule also strained relationships with key allies by arbitrarily dividing countries into compliance “tiers,” labeling many friendly nations as second-class partners. This kind of regulatory hierarchy undermines trust and risks pushing allies toward non-American technology alternatives. 4. Lack of Due Process The Diffusion Rule was issued just five days before the end of the Biden administration without a meaningful public comment or review period. Given its sweeping scope, its retroactive elements, and the global compliance burden it imposed, this rollout was deeply flawed from both a procedural and practical standpoint. ⸻ In his first week in office, President Trump directed us to win the AI race. The Biden Diffusion Rule undermines that goal. It bogs American tech companies down in red tape, while slowing the global adoption of U.S. technologies at a time when we should be encouraging the world to build on our tech stack. As @VP J.D. Vance emphasized in his Paris Speech on AI, the United States should be the gold standard and partner of choice for our allies and strategic partners. If we make it too hard for them to work with us, we risk pushing them into China’s orbit. China has already launched a Digital Silk Road as part of its broader Belt and Road Initiative. If we don’t offer a compelling alternative, we leave the field open. Yes, we must take aggressive steps to prevent advanced semiconductors from being illegally diverted into China. But that goal should not preclude legitimate sales to the rest of the world as long as partners comply with reasonable security conditions. Today, American chips remain superior to China’s—but that lead is narrowing. If U.S. companies are hamstrung by excessive regulation, and foreign customers are blocked from buying our technology, we risk ceding global markets and influence to Chinese competitors. Right now, we have the opportunity to entrench the American tech stack worldwide while we still have a commanding lead. Let’s seize it.