How Trump, China & Trade Wars Will Affect the Global AI Landscape in 2025
Making Export controls great again in the age of Protectionism. (MEC-GAP)
Audio 25 min 56 Seconds
I’ve been watching the Biden Administration’s export controls closely around AI chips. U.S. exceptionalism in the mid 2020s is taking many forms as experts grapple with China’s response to the various measures and if they have worked or even backfired in some unintended ways as historically has often occurred in hindsight. I say this as President Elect Trump has one week until he enters office on January 20th, 2025 which is also Martin Luther King Jr. Day. This as Trump toys with the idea of giving Elon Musk TikTok’s U.S. operations, as per Bloomberg.
I asked
of Futuristic Lawyer to get his take on the history of all of these export controls and trade wars and Trump’s likely impact on them, but a lot has taken place since he wrote the article in December just a few short weeks or days ago.The Biden administration on January 13th, announced new export restrictions focused on artificial intelligence chips and proprietary neural networks.
Nvidia was quick to signal their response in a blog posted here.
As I reported on Semiconductor Things on Thursday, export controls have been ramping up.
On December 2nd, 2024 the U.S. had already launched its third crackdown in three years on China’s semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group, among other moves.
Then on January 7th, 2025 The US added several Chinese technology companies, including gaming and social media giant Tencent and battery maker CATL, to a list of businesses it says work with China's military.
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The Biden administration’s last hurrah is fairly dystopian and ranks foreign countries into three groups with various incentives to try to enhance U.S. national security and economic strength (of America). Nvidia is calling the policy ‘misguided’, Nvidia who will soon make nearly 20% of their revenue from China.
Let’s also point out how this flavor U.S. exceptionalism works:
🟢 No restrictions apply to chip sales to 18 key allies and partners.
🤔 LLMs: Restricting the transfer to non-trusted actors of the model weights for advanced closed-weight (read “duopoly”) models.
🔵 The rule builds on previous regulations that aim to protect U.S. national security, including the October 2022 and October 2023 chip controls.
The rules basically cap shipments of advanced AI processors on both a company and a country basis, covering most of the world in an expansion of trade curbs that have mostly targeted China (and its allies). Trump’s Administration is expected to keep to these rules. According to Bloomberg, these rules have set off a “firestorm in Washington”, with some key tech companies — Nvidia in particular — lobbying fiercely against what they see as an extreme overreach. NVDA 0.00%↑ Nvidia’s stock is suddenly down 10% in the last five days.
The new regulation is meant to keep AI from fueling Beijing's military development, administration officials say. However it’s clearly a position of fear and protectionism where U.S. elites are worried about China’s surprising capabilities in AI, patents, multiple emerging tech disciplines, including space technologies, drone technologies, robotics, biotechnology, quantum computing and so forth (basically all the topics I cover).
Unfortunately this will be part of Biden’s legacy. It carves the world up into friends, neutrals and enemies of the United States with profound geopolitical consequences. If you are part of the lucky 18, these new rules mean they won’t place any restrictions on AI chip sales to 18 allied countries.
The rules categorize countries for GPU export controls, impacting Nvidia's (and a host of other companies) market.
Part of these 18 “friends” of U.S. exceptionalism include: The allies without restrictions include 🇦🇺 Australia, 🇧🇪 Belgium, 🇨🇦 Canada, 🇩🇰 Denmark, 🇫🇮 Finland, 🇫🇷 France, 🇩🇪 Germany, 🇮🇪 Ireland, 🇮🇹 Italy, 🇯🇵 Japan, 🇳🇱 the Netherlands, 🇳🇿 New Zealand, 🇳🇴 Norway, 🇰🇷 Republic of Korea, 🇪🇸 Spain, 🇸🇪 Sweden, 🇹🇼 Taiwan (Because of course - TSMC) and the 🇬🇧 United Kingdom.
If you want to read the entire thing go to the Biden administration's Commerce Department 168-page document of fresh regulations for the US semiconductor industry (I believe it will be available on Wednesday).
The rule will create a new global licensing system for the most advanced AI technology exports. The result might actually push BRIC countries closer together and make them more reliant on China’s own nascent semiconductor industry. It’s a divide-and-conquer sort of policy. There are some notable losers who somehow escape being in the friend-group: Notably 🇮🇱 Israel, 🇵🇹 Portugal, 🇸🇬 Singapore, 🇲🇽 Mexico, 🇲🇾 Malaysia, 🇦🇪 UAE, 🇸🇦 Saudi Arabia, 🇮🇳 India and quite a few others (baffling!).
Finally, the policy does not control open-source models, nor would it be able to, a key consideration. Before implementing the new rules, the Commerce Department will give interested parties 120 days to submit feedback. It’s also super interesting and major news with regards to AI in the global order and policies of U.S. exceptionalism trying to limit other regions who they consider national security rivals namely China, Russia and Iran.
Creating a hierarchy in the world around AI chip and model access to U.S. leadership is highly problematic. It could also substantially disrupt global semiconductor supply-chains while negatively impacting certain regions economically that favors the U.S. (and its allies) to the detriment of others and, is not in the spirit of democratizing AI. National security competition has a dark side.
Ken Glueck, Executive Vice President of Oracle, argues that the regulations will create a market opening for PRC companies in most countries. And he’s not wrong.
Nvidia, Oracle and industry groups say the rules will undermine American competitiveness and hinder innovation, as reported by Axios.
The U.S. with these policies could also be making matters worse and it likely accelerates a Western bloc vs. an Eastern bloc around the AI arms race that is related to technological supremacy of various kinds that could become an existential threat to civilization’s global security. National factors should never be put ahead of global security concerns. I will leave it at that.
What follows is Tobias’s deep dive into the historical outlines of how we came to this point before a lot of the recent drama occured in the most recent weeks.
Explore the Work of Futurist Lawyer:
By
(Tobias Mark Jensen), December, 2024.Introduction
In the weeks leading up to the US Presidential Election, I consumed many excellent critiques of Trump. The one I found most impactful was “We Created a Monster: Trump Was a TV Fantasy Invented for 'The Apprentice” by NBC’s former Chief of Marketing, John D. Miller.
A few weeks before Election Day, Miller issued an unconditional apology in U.S. News & World Report for creating the illusion that Trump was a successful businessperson as part of the marketing campaign for the popular TV show The Apprentice.
“To sell the show, we created the narrative that Trump was a super-successful businessman who lived like royalty. That was the conceit of the show. At the very least, it was a substantial exaggeration; at worst, it created a false narrative by making him seem more successful than he was. In fact, Trump declared business bankruptcy four times before the show went into production, and at least twice more during his 14 seasons hosting.”
Miller, who interacted continuously with Trump throughout the long-running show, characterizes him as “manipulative, yet extraordinarily easy to manipulate”, “thin-skinned”, as having "questionable judgment" and that "he thought he could simply say something over and over and eventually people would believe it”.
“He would say to me, “‘The Apprentice’ – America’s No. 1 TV show.” But it wasn’t. Not that week. Not that season. I had the ratings in front of me. He had seen and heard the ratings, but that didn’t matter. He just kept saying it was the “No. 1 show on television,” even after we corrected him. He repeated it on press tours too, knowing full well it was wrong. He didn’t like being fact-checked back then either.”
Trump’s ability to think he can refute reality by continuously repeating false statements is part of his appeal to voters and what makes him a humoristic and charismatic leader of the free world, without comparison. Trump’s campaign rallies are a curious mix of stand-up comedy routines and a cult leader delivering truths with fierceness and fatherly authority to the hearts of his followers.
Another major part of Trump’s appeal to voters is that he can offer simple solutions to complex problems. Even to extremely complex matters such as foreign trade policy and dealing with China. A word that is frequently brought up during Trump’s rallies is “tariffs”. Trump affectionally calls tariffs “the most beautiful word in the dictionary” and “more beautiful than love”.
Trump considers the import taxes placed on foreign goods and the trade wars he initiated with China as a crowning achievement of his 2017-2021 presidency. To defeat China in the technology arms race that is currently playing out between the two superpowers, Trump’s answer is simple: higher tariffs and export bans. In Trump’s pitch to voters during the 2024 presidential race, he floated the idea of imposing as much as 60% tax on goods exported from China.
The trade war with China has been the most abrupt change in the history of US trade policy and not a particularly successful strategy. As a result of the trade war, the income in both China and the US has declined (albeit with a small margin relative to GDP) and the brunt of the tariffs was carried by consumers through higher prices. That was the conclusion of a comprehensive literature review by the economic researchers Pablo D. Fajgelbaum and Amit K. Khandelwal, “The Economic Impacts of the US–China Trade War“ (2022). See Paul Krugman’s recent comments on Trump’s trade policy here.
In this post, we will try to understand the trade war between the US and China a bit better, and how it may impact the development of AI globally in 2025 and beyond.
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