The Trump administration is considering new export controls to block China from accessing advanced artificial intelligence compute through remote servers in Thailand and Singapore. The proposed rule, which the U.S. Department of Commerce may share with trade groups in September 2026, aims to close a loophole highlighted by allegations that Chinese startup Moonshot used Nvidia-equipped servers in Thailand to distill Anthropic's Fable model. However, legal experts warn the department lacks authority to regulate remote digital access.
Remote AI server access loophole
- ▪The Trump administration is considering a new artificial intelligence export control rule to restrict the People's Republic of China's access to advanced AI compute through remote servers in nearby countries.
- ▪The proposed U.S. export control rule would target remote AI server access through Thailand and Singapore, which are not subject to the same export controls as China.
- ▪The U.S. Department of Commerce could share the proposed remote AI server access rule with trade groups to gather feedback as early as September 2026.
U.S. export control policy uncertainty
- ▪In March 2026, the U.S. Department of Commerce announced a tiered licensing structure for advanced AI chip exports, but revoked the rule a little over a week later due to pushback from the U.S. AI industry.
- ▪The Trump administration has stated it will not enforce the Foundry Due Diligence Rule, a know-your-customer check put into effect by the Biden administration in early 2025.
- ▪The U.S. government has faced policy uncertainty since overturning the Biden-era AI Diffusion Rule in early 2025, which remains in effect but is not being enforced by the U.S. Department of Commerce.
- ▪Current U.S. House members have called on the Trump administration to enforce the export controls that Joe Biden introduced at the end of his presidential term in early 2025.
Moonshot Kimi K3 distillation allegations
- ▪White House Office of Science and Technology Policy Director Michael Kratsios alleged in July 2026 that Chinese AI startup Moonshot used distilled U.S. models to train its Kimi K3 model.
- ▪White House Office of Science and Technology Policy Director Michael Kratsios alleged that Moonshot accessed Nvidia-equipped servers in Thailand to perform large-scale distillation against U.S. models, specifically distilling Anthropic's Fable model.
Taiwan chip smuggling enforcement
- ▪In August 2026, the Taiwanese government indicted nine people in relation to Supermicro servers being illegally smuggled to China.
- ▪In July 2026, an Nvidia employee was detained in Taiwan on suspicion of falsifying documents related to the alleged smuggling of advanced AI chips to China.
Commerce Department regulatory authority limits
- ▪U.S. export controls are primarily governed by 2022-era rules that restrict Chinese access to advanced AI chips and semiconductor manufacturing tools, such as extreme ultraviolet lithography machines.
- ▪An attorney at the law firm Baker McKenzie stated that it is widely acknowledged that the U.S. Department of Commerce cannot enforce regulations on remote digital access, as it traditionally regulates physical goods.
Story comments
Loading comments…