The U.S. Department of Commerce (DOC) has formally withdrawn the Biden Administration’s AI Diffusion Rule. This decision came just days before the rule was set to take effect on May 15, 2025.
The rule, introduced in January by former President Joe Biden, aimed to place new limits on exporting U.S.-made AI chips. It would have applied different restrictions depending on a country’s risk level.
However, on Tuesday, the DOC confirmed that it will no longer enforce the policy.
What the AI Diffusion Rule Would Have Done
Biden’s rule divided countries into three categories. Each group faced different levels of control based on national security concerns.
| Tier | Examples | Impact |
| Tier 1 | Japan, South Korea | No new restrictions |
| Tier 2 | Mexico, Portugal | First-time export limits introduced |
| Tier 3 | China, Russia | Tighter restrictions and added controls |
Tier 1 partners, considered trusted allies, would see no change. Tier 2 countries, many of which had never faced export limits, would be newly restricted. Tier 3 countries, like China and Russia, would face even stricter rules.
The Biden Administration designed the policy to slow the spread of powerful U.S.-made AI chips to countries that could misuse them.
Why the Rule Was Pulled Back
Instead of enforcing the rule, the Trump Administration chose to take a different path. On May 13, the DOC announced it would no longer move forward with Biden’s policy. The department plans to create a new rule later, likely focused on direct talks with individual countries.
According to reporting from Bloomberg, the Trump Administration wants to avoid blanket restrictions. Officials prefer case-by-case decisions and tighter partnerships with selected allies.
In a statement, Jeffery Kessler, U.S. Secretary of Commerce for Industry and Security, called the Biden-era rule “ill-conceived and counterproductive.”
He said the new approach will protect U.S. technology while encouraging collaboration with trusted countries.
Temporary Guidance Replaces Formal Policy
In the meantime, the DOC released guidance for companies in the AI chip sector. Although not legally binding, the recommendations remind firms to stay compliant with existing laws.
