The Commerce Department is drafting regulations that would require government approval for nearly all global shipments of advanced AI chips from American companies - a policy so similar to Biden’s “diffusion rule” that industry sources are calling it “Diffusion 2.0.” The problem: President Trump already killed Biden’s version just months ago.
The rules aren’t final, and reports suggest the White House opposes any approach that mirrors Biden’s framework. But the draft shows how difficult it is to maintain American AI dominance while also promoting “free trade” - the two goals pull in opposite directions.
What the Draft Rules Would Do
According to Bloomberg, Commerce has drafted regulations that would shift chip export controls from targeting specific countries (mainly China) to a global licensing system covering all high-performance AI accelerators. This would affect Nvidia, AMD, and any other American company making advanced GPUs.
The proposed framework creates three tiers based on order size:
Small orders (under 1,000 chips): Standard review process
Medium orders: Preclearance required before applying for a license
Large orders (200,000+ GPUs): The strictest scrutiny - nations would need to provide security commitments and pledges to invest in U.S.-based AI infrastructure
Countries already under comprehensive sanctions - China, Russia, North Korea, Iran - would remain blocked entirely, as they are now.
The Trump vs. Commerce Clash
This creates an awkward situation. Trump made rescinding Biden’s AI diffusion rule a priority, formally killing it in May 2025 less than a week before it was set to take effect. The argument: Biden’s rules were too restrictive and hurt American competitiveness.
Now Trump’s own Commerce Department is drafting rules that accomplish similar goals through different means. Axios reports that the White House opposes any policy resembling Biden’s approach, but Commerce officials argue some framework is necessary to maintain control over where advanced AI capabilities end up.
Industry sources told reporters the draft is essentially “diffusion 2.0” - which isn’t a compliment given how loudly the sector complained about Biden’s version.
Why This Keeps Coming Back
The core tension hasn’t changed. The U.S. wants to:
- Prevent adversaries from acquiring advanced AI chips
- Prevent allies from becoming AI hubs that compete with American companies
- Maintain leverage over global AI infrastructure buildout
- Keep American chipmakers profitable
These goals conflict. Nvidia generated $17 billion from China in 2024 - roughly 13% of its revenue - before sales were suspended. That money went somewhere; it didn’t disappear. Without controls, it goes to whoever can deliver chips. With controls, American companies lose revenue and allies get frustrated.
The draft rules essentially acknowledge that country-specific restrictions create whack-a-mole problems. Block China, and chips route through other nations. The global licensing approach tries to close that gap by monitoring all significant deployments, not just those going to adversaries.
The Foreign Investment Angle
One new element: foreign nations wanting large chip deployments (200,000+ GPUs) would reportedly need to pledge investments in U.S. AI data centers as a condition for approval. Smaller orders (up to 100,000 chips) would require government-to-government assurances.
This turns chip exports into a negotiating tool. Want advanced AI infrastructure? Invest in America first. It’s economic leverage dressed up as national security policy - which may be the point.
What Happens Next
The draft rules haven’t been finalized, and given White House opposition, they may be significantly revised or shelved. But the underlying problem remains: after rescinding Biden’s framework, the administration left a vacuum. These draft rules are one attempt to fill it.
Markets reacted modestly - Nvidia fell about 1.1% and AMD dropped roughly 1.2% on the news. Investors have seen this before. Export control announcements come and go; the actual rules that stick often look different from early drafts.
The deeper issue is that every administration since Trump’s first term has struggled with the same dilemma. AI chips are the most strategically important technology America produces. Controlling where they go means limiting who can build advanced AI systems. But every restriction also costs American companies money and gives competitors openings.
Whatever framework eventually emerges will be a compromise between security hawks who want tight controls and industry lobbyists who want maximum sales. The fact that Commerce is drafting “diffusion 2.0” while Trump publicly opposes anything resembling Biden’s rules shows how far that debate still has to go.