Trump Administration Announces Crackdown on Chinese AI Model Exploitation

Apr 25, 2026

The Trump administration announced enforcement action against Chinese companies accused of exploiting American AI models through distillation techniques, with chief science adviser Michael Kratsios issuing a memo Thursday alleging industrial-scale extraction campaigns. The move comes as China's AI capabilities have closed the gap with U.S. dominance, highlighted by startup DeepSeek releasing a competitive large language model at a fraction of typical costs that rattled U.S. markets. U.S. AI companies including OpenAI and Anthropic have accused Chinese firms of illicitly copying their models, while China's Foreign Ministry dismissed the allegations as groundless smears. The House Foreign Affairs Committee unanimously supported legislation to identify and sanction foreign actors engaged in model extraction, though experts warn enforcement will be challenging and may be complicated by Trump's planned mid-May state visit to Beijing.

Trump Administration's Crackdown on AI Model Distillation

▪Rep. Bill Huizenga, R-Mich., sponsored the House Foreign Affairs Committee bill on model extraction.
▪Michael Kratsios, President Trump's chief science and technology adviser, issued a memo on Thursday accusing 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.
▪The Trump administration will work with American AI companies to identify distillation activities, build defenses, and find ways to punish offenders.
▪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.

China's Rising AI Capabilities and Competitive Position

▪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 China has always been committed to promoting scientific and technological progress through cooperation and healthy competition.
▪China is challenging U.S. dominance in artificial intelligence.
▪China's Foreign Ministry spokesperson Guo Jiakun told reporters Friday that the U.S. claims are groundless and were smearing the achievements of China's artificial intelligence industry.
▪Chinese startup DeepSeek released a large language model last year that could compete with U.S. AI giants but at a fraction of the cost.

Allegations Against Chinese AI Companies

▪David Sacks, then serving as President Donald Trump's AI and crypto adviser, suggested that DeepSeek copied U.S. models by distilling knowledge out of OpenAI's models.
▪San Francisco-based startup Anysphere, maker of the popular coding tool Cursor, recently acknowledged that its latest product was based on an open-source model made by Chinese company Moonshot AI, maker of the chatbot Kimi.
▪Anthropic said distillation involves training a less capable model on the outputs of a stronger one.
▪Anthropic, the maker of the Claude chatbot, accused DeepSeek and two other China-based AI laboratories in February of engaging in campaigns to illicitly extract Claude's capabilities to improve their own models using the distillation technique.

Challenges in Detecting and Preventing Model Extraction

▪President Donald Trump has a planned mid-May state visit to Beijing.
▪Kyle Chan said Trump may not want to rock the boat with Chinese President Xi Jinping ahead of a planned mid-May state visit to Beijing.
▪Kyle Chan said the federal government can play an important role in facilitating anti-distillation efforts across labs.
▪Kyle Chan said information sharing and coordination among U.S. AI labs could help prevent model extraction.
▪Kyle Chan, a fellow at The Brookings Institution and an expert on China's technology development, said it will be like looking for needles in an enormous haystack to separate unauthorized distillation from the vast volume of legitimate requests for data.

Perspective of Trump Administration

▪The U.S. must prevail in artificial intelligence to set global standards and reap economic and military benefits, according to the White House.

Perspective of U.S. AI companies

▪China should not be allowed to advance autocratic AI by appropriating and repackaging American innovation, according to OpenAI in a February letter to U.S. lawmakers.