Trump Administration Revokes AI Diffusion Rule

May 09, 2025

Good morning. The Trump Administration has announced it will revoke the Biden AI Diffusion Rule which would have put unnecessary constraints on American AI chips. As ALFA has said for months, this rule would hurt our competitive advantage while giving China more runway to grow its AI influence around the world. Below we recap ALFA’s work on this issue.

⚡️ALFA is a technology policy platform and we want to know what you’re working on. Do you have an upcoming hearing, bill introduction, or product launch that supports technological advancement that you want people to know about? Drop us a line at [email protected] and we’ll be happy to share your news here with our growing community of elected officials, staffers, builders, advocates, and enthusiasts.

America’s AI Leadership

Ever since the Biden Administration issued a rule limiting American AI companies from selling chips to friends and allies abroad — just days before he left office — ALFA has talked about the likely negative consequences.

This AI Diffusion rule would hurt American competitiveness and leave countries like Israel and Poland looking elsewhere for AI chips. At the time of the announced rule we wrote:

“The AI chip market is among the most sought-after in the world — and fortunately, American companies are the ones setting the pace. Yet by taking American products off the playing field, the U.S. risks ceding tech leadership to foreign competitors, especially those backed by the Chinese government. As the old saying goes, ‘when one door closes, another opens.’”

Meanwhile, proponents of the rule discounted the notion that Chinese-backed companies like, Huawei were capable of challenging America’s tech dominance.

Then came DeepSeek.

DeepSeek’s innovations in model architecture and training efficiency showcase the kind of relentless pursuit we should expect from a serious competitor.

ALFA // January 28

And then came reports that Huawei’s development was far more advanced that people originally thought.

Huawei has unveiled an AI supercomputing system that delivers nearly double the compute of Nvidia's top system – with 3.6x more aggregate memory capacity and 2.1x more memory bandwidth.

ALFA // April 18

The latest news from the Commerce Department and Bureau of Industry and Security shows the Trump Administration is clear-eyed about the AI race between America and China. And yes, it is an infinite competition. But establishing pole position means a lot, and expanding our first-mover status to countries around the world will ensure America sets the pace.

As the Trump Administration drafts its own AI export policy, ALFA will continue to share perspective and ideas from industry and government leaders for how to expand our technological advantage.

-Matt Sparks

Field Notes

  • The Natural Resources Committee passed their portion of the reconciliation bill with a 26-17 vote (one Democrat voted in favor). The Energy and Commerce Committee is set to markup their portion of the reconciliation bill next Tuesday — which we understand will include further permitting reform.

  • ALFA and Breitbart News are excited to announce our next event with Secretary of Agriculture Brooke Rollins on May 20. Technological advancements from autonomous systems and satellite imagery are making vast inroads into the constituencies served by USDA — whether it is helping America’s farmers increase crop yields and monitor and fight off invasive diseases, or providing new tools to fight wildfires.

  • The House Committee on Science, Space, and Technology held a hearing this week titled “From Policy to Progress: How the National Quantum Initiative Shapes U.S. Quantum Technology Leadership.” The hearing evaluated the progress of the National Quantum Initiative Act (NQIA) since its enactment in 2018 and explored strategies to maintain U.S. leadership in quantum technologies.

Thanks for reading and have a great day.

🇺🇸🇺🇸🇺🇸