Trump administration drafts rule to close China's remote chip loophole

The Trump administration is preparing a rule that would stop Chinese companies from renting American AI chips through data centers in other countries. 

This is a channel that the current US export controls do not cover currently.

Who is writing the rule and when will it land?

The Commerce Department’s Bureau of Industry and Security (BIS) is the office that has been working on the draft. BIS is also the office in charge of chip export licensing. 

People close to the matter say that the rule could get circulated to AI companies and other stakeholders as early as September.

Should the rule advance, it would replace the Biden-era AI Diffusion Rule, a framework that capped sales of advanced chips to certain countries. 

BIS scrapped that rule in 2025, saying it would have “stifled American innovation and saddled companies with burdensome new regulatory requirements.”

Why physical export controls miss the problem

While Washington’s export controls can block Nvidia’s top processors from shipping into China, it cannot stop a developer in Shanghai from paying to run workloads on those same chips sitting in a server rack abroad. 

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