Commerce Department chip export controls stall under Trump
Former officials say bottlenecks at the Bureau of Industry and Security are undermining efforts to restrict China's access to advanced AI technology.
The federal agency responsible for controlling exports of advanced semiconductor technology to China has slowed dramatically, raising concerns among national security hawks that sensitive AI chips may be reaching Beijing despite restrictions.
The Commerce Department's Bureau of Industry and Security, which enforces export controls on cutting-edge chips and AI technology, is processing license applications at half its previous speed and has gone eight months without updating its blacklist of restricted foreign companies—the longest gap since 2008, according to details first reported by POLITICO.
Former agency officials, including four who served in Trump's first administration, point to management problems under bureau chief Jeffrey Kessler and Commerce Secretary Howard Lutnick. They say Kessler personally reviews nearly all export license applications, a task traditionally handled by career staff, creating bottlenecks that leave billions of dollars in U.S. technology exports in limbo.
Why it matters
Export controls have become Washington's primary tool for maintaining America's lead in artificial intelligence over China. When the agency tasked with enforcing those controls grinds to a halt, advanced chips that could accelerate Chinese military AI development have more opportunity to slip through. The dysfunction also reflects deeper tensions within the Trump administration over how aggressively to confront Beijing while pursuing broader economic negotiations with Xi Jinping.
A critical oversight
The most serious incident occurred in May 2025, when Commerce announced it would not enforce a Biden-era rule restricting chip sales to Chinese subsidiaries but failed to issue replacement guidance for a full year. The agency only clarified the policy gap on May 31, 2026—potentially allowing thousands of advanced processors, including Nvidia's Blackwell chips, to reach China in the interim, according to two former BIS officials.
The Bureau of Industry and Security called claims of a slowdown a "false narrative" but acknowledged that average license processing time reached 62 days in 2025, slower than previous administrations. The agency said it has shifted focus to enforcement, imposing $324 million in penalties last year compared to $16 million in 2024.
Mounting delays
A Center for Strategic and International Studies analysis found BIS published fewer rules in the months following Kessler's March 2025 appointment than in any comparable period in two decades. The Semiconductor Industry Association reported its members waited an average of 76 days for export licenses to low-risk countries in 2025, double the 38-day average from fiscal 2023.
Kessler, a trade lawyer who served as Commerce's top trade enforcement official in Trump's first term, lacks prior experience with export control policy, according to former officials. They say he frequently seeks approval from Lutnick even for routine decisions, while Lutnick focuses primarily on investment deals rather than the technical details of export restrictions.
BIS Deputy Under Secretary Joe Bartlett, the bureau's second-ranking official overseeing tech export regulation, is leaving for private practice. Two former officials and two people close to the administration said his departure stems from frustration with the bureau's direction.
White House spokesperson Kush Desai defended Kessler, saying he "is restoring competence in BIS decision-making." The Commerce Department did not respond to requests for comment.
These details were first reported by Ari Hawkins and Ben Johansen at POLITICO.
This is an original analysis by the Omega editorial team. Source reporting: AI Watch.
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