Trump Administration Intensifies Efforts Against Chinese Firms Allegedly Misusing US AI Technology

WASHINGTON – The Trump administration has announced plans to intensify measures against foreign technology firms that exploit U.S. artificial intelligence models, with a specific focus on China as it continues to close the technological gap with the United States.

In a memo released on Thursday, Michael Kratsios, the president’s chief science and technology adviser, accused foreign actors, especially those based in China, of orchestrating large-scale efforts to extract capabilities from leading U.S. AI systems. Kratsios highlighted these activities as deliberate attempts to undermine American innovation and expertise.

To counter these efforts, Kratsios indicated that the administration will collaborate with American AI companies to identify and defend against such activities and explore punitive measures for those involved.

This memo is timely, as China is increasingly challenging the U.S. in the field of artificial intelligence. The White House emphasizes the importance of maintaining U.S. leadership in AI to set global standards and secure both economic and military advantages. However, a recent report by Stanford University’s Institute for Human-Centered AI suggests that the performance gap between top AI models in the U.S. and China has substantially narrowed.

In response, the Chinese embassy in Washington expressed opposition to what it described as the U.S.’s unjustified suppression of Chinese companies.

“China has always been committed to promoting scientific and technological progress through cooperation and healthy competition. China attaches great importance to the protection of intellectual property rights,” said Liu Pengyu, the embassy spokesperson.

Kratsios’ memo also came the same week that the House Foreign Affairs Committee offered unanimous, bipartisan support for a bill to set up a process to identify foreign actors that extract “key technical features” of closed-source, U.S.-owned AI models and to punish them with measures including sanctions.

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

Last year, the Chinese start-up DeepSeek rattled U.S. markets when it released a large language model that could compete with U.S. AI giants but at a fraction of the cost.

David Sacks, then serving as President Donald Trump’s AI and crypto adviser, suggested that DeepSeek copied U.S. models. “There’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models,” Sacks said then.

In a February letter to U.S. lawmakers, OpenAI, the developer of ChatGPT, made similar allegations and said China should not be allowed to advance “autocratic AI” by “appropriating and repackaging American innovation.”

Anthropic, the maker of the Claude chatbot, in February accused DeepSeek and two other China-based AI laboratories of engaging in campaigns to “illicitly extract Claude’s capabilities to improve their own models” using the distillation technique that “involves training a less capable model on the outputs of a stronger one.”

Anthropic said distillation can be a legitimate way to train AI systems but it’s a problem 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.”

But it can go both ways. San Francisco-based startup Anysphere, maker of the popular coding tool Cursor, recently acknowledged that its latest product was based on an open-source model made by Chinese company Moonshot AI, maker of the chatbot Kimi.

Kyle Chan, a fellow at the Washington-based think tank The Brookings Institution and an expert on China’s technology development, said it will be like “looking for needles in an enormous haystack” to separate unauthorized distillation from the vast volume of legitimate requests for data. But information sharing and coordination among U.S. AI labs could help, and the federal government can play an important role in facilitating anti-distillation efforts across labs, Chan said.

It’s hard to assess how far the House bill can go, but Chan said Trump may not want to rock the boat with Chinese President Xi Jinping ahead of a planned mid-May state visit to Beijing.

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