Trump administration vows crackdown on Chinese companies ‘exploiting’ AI models made in US

WASHINGTON (AP) — The Trump administration is vowing to crack down on foreign tech companies’ exploitation of U.S. artificial intelligence models, singling out China at a time that country is narrowing the gap with the U.S. in the AI race.

In a Thursday memo, Michael Kratsios, the president’s chief science and technology adviser, accused foreign entities “principally based in China” of engaging in deliberate, industrial-scale campaigns to “distill,” or extract capabilities from, leading AI systems made in the U.S. and “exploiting American expertise and innovation.”

The administration, Kratsios wrote, will work with American AI companies to identify such activities, build defenses and find ways to punish offenders.

The memo arrives at a time when China is challenging U.S. dominance in artificial intelligence, an area where the White House says the U.S. must prevail to set global standards and reap economic and military benefits. But the U.S.-China gap in performance of top AI models has “effectively closed,” according to a recent report from Stanford University’s Institute for Human-Centered AI.

China’s embassy in Washington said it opposed “the unjustified suppression of Chinese companies by the U.S.”

“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.”