US AI Export Controls Require Allied Buy-In to Slow China

Allied coordination determines control effectiveness

The United States cannot meaningfully restrict China's access to advanced AI technologies through unilateral export controls, according to analysis from the East Asia Forum. The global semiconductor supply chain spans multiple allied nations—Japan, South Korea, and the Netherlands produce memory chips and manufacturing equipment essential for AI development that Washington cannot directly control.

The US Department of Commerce announced sweeping AI-related semiconductor export controls in December 2024, with additional guidance issued in May 2026 clarifying licensing requirements for Chinese-headquartered entities operating outside China. These measures aim to deny Beijing the computing power needed for next-generation AI and advanced military capabilities.

Yet the effectiveness of these restrictions hinges entirely on whether allied governments enforce parallel controls, even when doing so conflicts with their commercial interests.

Commercial pressures undermine policy alignment

Japan illustrates the coordination challenge. Following a 2023 surge in semiconductor manufacturing equipment exports to China, Washington persuaded Tokyo to restrict sales of key chipmaking tools. The decision generated internal controversy—Japanese policymakers and industry leaders worried about provoking Beijing and harming firms dependent on Chinese customers.

Uncertainty about US policy commitment compounds the problem. Reports of internal Trump administration disagreements over whether Nvidia should continue exporting H20 chips designed for the Chinese market have created doubt about Washington's resolve. The administration's withdrawal of the AI Diffusion Rule—which had differentiated countries by trust level—reinforced perceptions that US export control policy remains unsettled.

When allied governments doubt Washington's long-term commitment to its own restrictions, they become less willing to absorb the economic costs of alignment.

Why it matters

The fragmented geography of AI supply chains means technology competition increasingly depends on alliance management, not just innovation or manufacturing capacity. If the United States cannot offer compensating benefits to offset the commercial costs its restrictions impose on allied economies, those allies will maintain access to Chinese markets regardless of Washington's strategic preferences—rendering export controls ineffective.

Offsetting costs through broader cooperation

Sustaining allied cooperation requires acknowledging distributive effects and sharing costs more equitably. One approach combines export controls with expanded economic and security benefits that help offset lost Chinese market access.

The 2025 APEC summit in South Korea demonstrated how this bargaining might operate. Nvidia CEO Jensen Huang met with Samsung and Hyundai executives—companies deeply integrated with US AI and automotive supply chains. Separately, President Trump and South Korean President Lee Jae-myung announced US approval for South Korea to manufacture nuclear-powered submarines, strengthening deterrence against North Korea.

While seemingly unrelated, these developments illustrate the broader alliance bargaining Washington may need to pursue. Technology restrictions become more politically sustainable when paired with compensating security and economic commitments. South Korean companies face real costs from limiting technology exports to China; Washington must complement export controls with benefits in other domains to sustain alignment.

The May 2026 Commerce guidance depends entirely on whether firms within allied economies have sufficient incentive to comply. Their decisions hinge on their position within global AI supply chains, the complementarity between their products and those required by US firms, and their governments' efforts to offset commercial burdens.

Effective export controls now depend on managing distributive economic tensions within alliances, not just restricting US-invented technologies. Sustaining cooperation will require combining export restrictions with broader economic and security coordination that addresses the uneven commercial costs faced by US allies.

This analysis was originally published by the East Asia Forum, authored by Sojun Park, a postdoctoral associate at MIT's Center for International Studies.