Trump’s Gov’t Cuts Risk Weakening Chip Export Enforcement, Researcher Says

The Bureau of Industry and Security could face significant challenges imposing and enforcing export controls against China if the Trump administration continues to slash government workers and resources, particularly in the national security sphere, a technology policy researcher said in a new report. The report said the U.S. needs to continue investing in efforts to close export control loopholes that allow China to acquire advanced artificial intelligence chips, but it also said that even “extremely aggressive” controls are unlikely to give the U.S. a large lead in the AI race.

“At this point, all the margin for sloppy implementation of export controls or tolerance of large-scale chip smuggling has already been consumed,” said the report, authored by Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies. “There is no more time to waste.”

The report, which examines the success of China’s AI model DeepSeek and its implications for U.S. export controls (see 2502030031 and 2501300067), said the success of those controls depends on “effective implementation and enforcement to prevent chip smuggling.” But both U.S. implementation and enforcement efforts appear to be hampered by several early steps taken by the Trump administration, the report said, including its purge of the federal workforce.

That has included pushing out some longtime career officials in BIS, with more departures expected (see 2502280006 and 2502270009).

“There is cause for significant concern on this point if the Trump administration reduces relevant government resources and staff or causes allied countries to not cooperate,” Allen said.

BIS has less than 600 employees and a “relatively paltry budget of just under $200 million” to oversee trillions of dollars in economic activity and prevent smuggling of illegal exports, Allen said. Those conditions contributing to a lack of resources could be hampering BIS enforcement efforts, he said, adding that China has reportedly evaded export controls by buying leading semiconductor firm Nvidia’s latest chips and routing them through third parties in nearby countries (see 2503100017).

“China is betting that its network of smugglers and shell companies can find the leaks in the BIS export control enforcement barrier,” Allen said. “As long as Congress continues to neglect BIS by providing grossly inadequate resources compared to the size and importance of its mission, China has a reasonable expectation of success.” The report said BIS needs more money, more skilled staff, more enforcement agents and “better enabling technology, especially in data analysis.”

The agency and the Commerce Department also need more help from other government agencies, including the U.S. intelligence community, Allen said, which was “deeply involved in assisting export control enforcement” during the Cold War. “These are capabilities and priorities that have significantly atrophied in the post-Cold War era but urgently need to be restored.”

Allen noted that Trump has so far slashed at least one government task force tasked with prosecuting export control and sanctions violations. Attorney General Pam Bondi in February disbanded the DOJ National Security Division’s Corporate Enforcement Unit as part of an effort to “free resources to address more pressing priorities” (see 2502060019). Bondi’s memo disbanding the unit “did not provide any explanation for how the duties of the unit would be performed” by other DOJ officials, the CSIS report said, “which could mean that this will be implemented as a straightforward reduction in U.S. government capacity to enforce export controls.”

Efforts like these and other moves to shrink government spending “risk making a bad situation worse,” Allen said.

“Of all the choices available, the worst policy choice that the U.S. government could make is to regulate aggressively but with large loopholes and weak enforcement,” he said. “Such an approach -- which fairly describes the approach taken in the first Trump administration and large chunks of the Biden administration -- incurs nearly all the costs of an aggressive export control policy but does so without providing any of the possible strategic benefits in terms of slowing Chinese progress in semiconductors and AI.”

Allen said U.S. firms are still ahead of China in the AI race, but that gap has “narrowed significantly,” and it’s “unrealistic” to expect a lead of more than a couple of years “even with extremely aggressive export controls.” Although existing export controls are having a large impact on China, especially if the country remains restricted from legally buying Nvidia’s most advanced chips, Beijing’s federal investments, chip smuggling efforts, hiring of international talent, reverse-engineering of foreign technology, state-backed economic espionage, domestic innovation and more are a “formidable combination.”