Trump Administration Targets China for Alleged AI Model Exploitation, Vows Enforcement Action

The Trump administration has vowed to crack down on foreign tech companies, particularly those based in China, for allegedly exploiting U.S.-developed artificial intelligence models. The announcement follows a Thursday memo from Michael Kratsios, the president’s chief science and technology adviser, which accuses foreign entities of conducting deliberate, industrial-scale campaigns to “distill” or extract capabilities from leading AI systems made in the U.S.

Kratsios stated that the administration will collaborate with American AI companies to identify such activities, strengthen defenses, and pursue penalties against offenders. The memo arrives amid growing concerns over China’s rapid advancement in AI, a field where the White House asserts U.S. leadership is critical to setting global standards and securing economic and military advantages.

According to a recent report from Stanford University’s Institute for Human-Centered AI, the performance gap between the U.S. and China in top AI models has “effectively closed.”

China Responds to U.S. Accusations

China has strongly rejected the allegations. In a statement, Liu Pengyu, spokesperson for the Chinese embassy in Washington, said the U.S. opposes “the unjustified suppression of Chinese companies.”

“China has always been committed to promoting scientific and technological progress through cooperation and healthy competition. China attaches great importance to the protection of intellectual property rights.”

In Beijing, Foreign Ministry spokesperson Guo Jiakun echoed these sentiments, calling the U.S. claims groundless and accusing Washington of smearing China’s AI achievements.

“China firmly opposes this. We urge the U.S. to respect facts, discard prejudice, stop suppressing China’s technological development, and do more to promote scientific and technological exchange and cooperation between the two countries.”

Bipartisan Support for AI Protection Legislation

The memo was released the same week the House Foreign Affairs Committee unanimously approved a bipartisan bill aimed at addressing the extraction of key technical features from closed-source, U.S.-owned AI models. The legislation seeks to identify foreign actors engaged in such activities and impose sanctions as a deterrent.

“Model extraction attacks are the latest frontier of Chinese economic coercion and theft of U.S. intellectual property. American AI models are demonstrating transformative cyber capabilities, and it is critical we prevent China from stealing these technological advancements.”

Rep. Bill Huizenga, R-Mich., who sponsored the bill, emphasized the urgency of protecting U.S. AI advancements from foreign exploitation.

DeepSeek Incident Highlights Tensions

Tensions escalated last year when Chinese startup DeepSeek released a large language model capable of competing with U.S. AI giants at a significantly lower cost. David Sacks, then serving as President Donald Trump’s AI and crypto adviser, alleged that DeepSeek had distilled knowledge from OpenAI’s models.

“There’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models.”

In February, OpenAI, the developer of ChatGPT, echoed these concerns in a letter to U.S. lawmakers, arguing that China should not be permitted to advance “autocratic AI” by appropriating American innovation.

Anthropic, the creator of the Claude chatbot, also accused DeepSeek and two other China-based AI laboratories in February of conducting campaigns to “illicitly extract Claude’s capabilities” using a distillation technique that involves training a less capable model on the original system’s outputs.