Trump moves to retain export limits on GPUs, with US AI dominance as the goal

US President Donald Trump must deal with a couple of conflicting policy goals as his administration reviews AI regulations and GPU export controls put in place by former President Joe Biden’s administration.

On one side, Trump has long promised to reduce regulations on US businesses, and several IT companies have opposed Biden’s limits on chip exports. But Trump also sees China, a primary target of the export limits, as a major economic and technology competitor to the US.

The debate over AI chip exports also extends into national security concerns, and many observers predict that the China critics in the Trump administration will win the AI policy debate, with export controls likely to remain in place.

While Trump has sent mixed messages about chip export controls and other AI regulations, giant GPU maker Nvidia on April 15 disclosed that the administration will require it to get a license to export its powerful H20 chips to China.

Short-term price uncertainty, long-term impacts

If Trump continues GPU export controls, there may be long-term implications for CIOs at companies in the West that are expanding their AI development efforts and implementations. While prices of these high-power chips aren’t likely to drop in the short term, Trump appears to want the US chip industry to become more self-sufficient, eventually bringing enhanced AI capabilities to companies in the US and allied nations, some observers say.

In the short term, renewed export controls may cause GPU prices to rise, as US chipmakers look to make up for limited markets by charging more to existing customers, suggests Daniel Keller, CEO and co-founder of InFlux Technologies, a blockchain-focused networking firm. However, the long-term impact will be a more self-reliant US GPU market, he adds.

Others see a limited impact on GPU prices. Costs in the near term aren’t likely to change because demand outstrips supply right now, says Tim Rosenberger, a legal policy fellow at the Manhattan Institute, a conservative think tank focused on IT and other policy areas. The longer-term benefits for Western organizations will be related to innovation, he suggests.

“With China excluded from purchasing, companies in the US and allied nations will have slightly more available supply but expect demand to remain constrained and costs to remain high,” he says. “Innovation will continue with more powerful, and more efficient, chips coming to market.”

But don’t count out China’s ability to keep pace, he adds, as it will try to surpass the performance of US chipmakers. Chinese chipmaker Huawei announced its new 910C chip in late April, with performance supposedly doubling its earlier chipsets, although still trailing Nvidia’s H20.

Advances in Chinese chips could change the game, says Maria Chamberlain, president of Acuity Total Solutions, a cybersecurity and facilities management firm. “Chipmakers’ health is critical for US innovation long-term, and I don’t know if it will really matter,” she says. “If China ends up producing competitive homegrown chips, this battle line of the tech war may evaporate.”

Before the second Trump administration, Nvidia and other members of the Semiconductor Industry Association strongly criticized the Biden administration export rules, and Amazon and Microsoft also called for Trump to reconsider the Biden regulations.

Chamberlain also questions the regulations, saying they give chipmakers compliance headaches and will slow innovation.

“Close allies are likely getting first dibs on chips, but the line’s long, and prices aren’t dropping,” she says. “Everybody else is getting a limited menu, and some are eyeing the Chinese food truck across the street, even if the quality’s uncertain.”

New president, same rules

However, the Trump administration appears to be embracing export controls. While a rewrite of the Biden rules may still be coming, the result is likely to be similar to the Biden rules, says Robert Knake, former White House cybersecurity director.

But Knake doesn’t see the Biden rules as particularly onerous. “A lot of Silicon Valley’s concerns with Biden-era regulations on AI were overstated in terms of the harm they were causing,” he says. “The AI regulations that were put in place were an incredibly light touch, and I don’t think they were harming our ability to compete with China or anybody else while developing AI.”

Some critics have questioned how effective US regulations can be, particularly when GPUs are available to rent in the cloud. But the US needs to attempt to limit China’s access in the name of national security and US competitiveness, Knake argues.

“If you are worried about China getting chips, but you may not like the Biden rule and think it could have been done better, you certainly want a regime in place so that somebody cannot export chips to AI to a third country and then have them repurchased or shipped to China,” he says. “You have to have some sort of control in place on chip exports.”

The Trump administration can resurrect know-your-customer regulations from the final days of his first administration in 2021 to limit China’s access to GPUs, Knake writes in a recent blog post.

The US should take a nuanced approach toward keeping advanced chips away from China and keeping Chinese developers from accessing GPUs in the cloud, he writes. “Industry should seek to shape the outcome rather than attempt to kill all together,” he adds.

Careful export controls are needed for US national security reasons, Manhattan Institute’s Rosenberger argues. China is primed for AI dominance with its state-affiliated IT firms and its ability to collect huge troves of AI data through its surveillance activities, he adds.

“Given these built-in advantages, the only hope for the US in maintaining an edge is through technical excellence that surpasses Chinese competence,” he says. “The threat posed by ceding AI supremacy to China is unlike any threat America has faced in the past and requires a unique approach to exports.”