The Trump administration plans to rescind and revise a key Biden-era rule that restricted exports of advanced AI chips, aiming to replace it with a streamlined system that it says will better support U.S. innovation and AI leadership, the Commerce Department confirmed on Wednesday.
The Biden administration’s rule, part of a broader effort to curb China’s access to military-grade semiconductor technology, was set to go into effect May 15. Known as the Framework for Artificial Intelligence Diffusion, the rule divided global countries into three tiers based on their level of trust and posed export caps accordingly.
Why It’s Being Scrapped:
The Commerce Department spokeswoman called the rule:
“Overly complex, overly bureaucratic, and would stymie American innovation.”
She said the Trump administration is preparing a simpler replacement that removes the tier-based structure and introduces a global licensing regime governed through bilateral government agreements instead.
Tier System Under Biden Rule:
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Tier 1: 17 allied countries + Taiwan (no restrictions)
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Tier 2: ~120 countries (chip quantity caps)
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Tier 3: China, Russia, Iran, North Korea (outright ban)
What Comes Next:
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A new rule will rescind the tiered structure.
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A government-to-government licensing regime is being discussed.
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There’s no official timeline yet, as internal debate continues.
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The Trump administration aims to focus on AI leadership and economic competitiveness, rather than control through blanket restrictions.
Market Reaction:
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Nvidia (NVDA.O), a leading AI chipmaker whose sales have been constrained by export limits, rose 3% on the news, but slipped 0.7% after hours as markets absorbed the uncertainty surrounding implementation.
Strategic Context:
The Biden rule was part of a multi-year initiative to block Chinese access to cutting-edge chips used in AI and defense, while bolstering U.S. global dominance in emerging technologies. But the Trump team argues that these controls could inadvertently hurt American firms by stalling chip sales to non-hostile countries and overcomplicating enforcement.
A shift to bilateral licensing could give the U.S. more flexibility and diplomatic leverage, but critics warn it may also open loopholes and weaken safeguards designed to prevent authoritarian regimes from exploiting AI.