Trump administration targets foreign exploitation of US AI models

The Trump administration has announced plans to crack down on foreign tech companies accused of exploiting American artificial intelligence models, specifically targeting China amid growing tensions in the global AI race.

In a memo released Thursday, Michael Kratsios, President Trump’s chief science and technology adviser, accused Chinese entities of conducting “deliberate, industrial-scale campaigns” to extract capabilities from leading U.S. AI systems. The administration vows to work with American AI companies to identify such activities, build defensive measures, and develop punishment mechanisms for offenders.

This aggressive stance comes as China rapidly closes the technology gap with the United States in artificial intelligence development. According to a recent report from Stanford University’s Institute for Human-Centered AI, the performance difference between top U.S. and Chinese AI models has “effectively closed,” raising concerns about America’s ability to maintain its competitive edge in this strategically critical field.

The Chinese embassy in Washington quickly responded to these allegations, with spokesperson Liu Pengyu stating that China “opposes the unjustified suppression of Chinese companies by the U.S.” He emphasized China’s commitment to “promoting scientific and technological progress through cooperation and healthy competition” and highlighted the country’s attention to intellectual property rights protection.

From Beijing, China’s Foreign Ministry spokesperson Guo Jiakun further rejected the U.S. claims, characterizing them as groundless accusations that smear the achievements of China’s AI industry. “We urge the U.S. to respect facts, discard prejudice, stop suppressing China’s technological development, and do more to promote scientific and technological exchange and cooperation between the two countries,” Guo stated.

The administration’s announcement coincides with bipartisan action in Congress. This week, the House Foreign Affairs Committee unanimously supported legislation establishing a process to identify foreign actors extracting “key technical features” of closed-source, U.S.-owned AI models. The bill, sponsored by Rep. Bill Huizenga (R-Mich.), would enable punishment including sanctions against violators.

“Model extraction attacks are the latest frontier of Chinese economic coercion and theft of U.S. intellectual property,” Huizenga said. “American AI models are demonstrating transformative cyber capabilities, and it is critical we prevent China from stealing these technological advancements.”

The issue gained prominence last year when Chinese startup DeepSeek released a large language model comparable to U.S. offerings but at significantly lower cost. David Sacks, then serving as Trump’s AI and crypto adviser, suggested the company had copied U.S. models, specifically claiming DeepSeek “distilled the knowledge out of OpenAI’s models.”

Major U.S. AI developers have made similar accusations. In February, OpenAI wrote to lawmakers arguing China should not be permitted to advance “autocratic AI” by “appropriating and repackaging American innovation.” That same month, Anthropic, creator of the Claude chatbot, accused DeepSeek and two other Chinese AI laboratories of “illicitly extract[ing] Claude’s capabilities to improve their own models” through distillation techniques.

Distillation involves training less capable models on the outputs of more sophisticated ones. While this can be a legitimate training method, Anthropic argues it becomes problematic when competitors “use it to acquire powerful capabilities from other labs in a fraction of the time, and at a fraction of the cost, that it would take to develop them independently.”

However, technology transfer isn’t exclusively one-directional. San Francisco-based startup Anysphere recently acknowledged that its latest coding tool was based on an open-source model developed by Chinese company Moonshot AI, creator of the Kimi chatbot.

Kyle Chan, a fellow at The Brookings Institution and expert on Chinese technology development, notes the difficulty in identifying unauthorized distillation amid legitimate data requests, comparing it to “looking for needles in an enormous haystack.” He suggests improved information sharing and coordination among U.S. AI labs could help address the issue, with the federal government facilitating these anti-distillation efforts.

Despite the aggressive rhetoric, analysts question how far this crackdown might progress, particularly with President Trump reportedly planning a state visit to Beijing in mid-May. The timing suggests potential diplomatic constraints on any immediate, severe actions against Chinese tech companies.