For years the U.S. has restricted exports of the most advanced AI chips. The goal is simple: keep the computing power behind frontier AI away from strategic rivals. It is one of the most consequential policies in modern trade law, and people still argue about whether it works. As an export lawyer, I see two distinct arguments, both with truth in them. There is a strong rationale for control, and a strong rationale for freer trade under a lighter burden.
The case for control
Advanced chips are the closest thing AI has to a chokepoint. They are hard to make, built by a handful of firms, and difficult to substitute. If the best models depend on that hardware, then controlling the hardware controls the frontier. Restrictions slow a rival’s access to military-grade AI, buy allied nations time, and do it with a targeted tool instead of a blunt trade war. This is export law doing exactly what it was built to do. The case for control is persuasive.
The case for freer trade
The other side is just as real. Cutting a large market off from the best chips gives it a strong reason to build its own, and to pour money into an industry that might never have existed otherwise. The rules also push sales to foreign competitors, invite smuggling and shell-company diversion, and punish the U.S. firms that actually try to comply. And there is a deeper problem. Our controls only have power for as long as rivals still need American chips. The more we force them to make their own, the less they need us. The advantage is real, but it is eroding.
The law is moving fast
And the law itself will not sit still. The whole regime runs on the Export Control Reform Act of 2018 (50 U.S.C. §§ 4801–4852), under which Commerce’s Bureau of Industry and Security writes the Export Administration Regulations. Look at one episode. The AI Diffusion Rule, issued in January 2025 to cap advanced-chip and closed-weight-model exports, was pulled barely four months later as too complex. A near-total reversal in a single cycle. Congress has its own answer, the Chip Security Act (S. 1705 / H.R. 3447), which would force location-verification onto exported chips. And the boldest move of all, conditioning China-sale licenses on the government taking a cut of the revenue, runs straight into the Constitution’s Export Clause (Art. I, § 9, cl. 5), which bars duties on exports.
So I will leave it with this thought. When a technology is both a security risk and a commercial crown jewel, how tightly should we hold it, and how would we really know whether we are protecting the lead or quietly giving it away?
If you need legal guidance on national security, government investigations, or international trade compliance, please contact Dilyn Loveless for a consultation.
