Commerce Department begins rescinding the AI Diffusion Rule
The Biden-era rule sorted the world into three tiers of chip-access restrictions; Commerce scrapped it days before it took effect and issued three guidance documents on Huawei's Ascend chips instead.
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The Commerce Department’s Bureau of Industry and Security said it was rescinding the Biden administration’s AI Diffusion Rule, an export-control framework issued in the final days of that administration that had sorted most countries into three tiers with different licensing requirements for buying advanced AI chips. The rule was due to take effect on May 15, 2025, two days after the rescission was announced.
BIS said the rule “would have stifled American innovation” and imposed “burdensome new regulatory requirements” on chipmakers and cloud providers, and argued that sorting allied and non-aligned countries into fixed tiers had damaged diplomatic relationships by treating some partners as suspect by default. In place of the tiered system, the agency said it would pursue what it called a “bold, inclusive strategy” for allied access while working on a replacement rule, without setting a timeline for issuing it.
Alongside the rescission, BIS published three guidance documents aimed at China specifically: a warning that using Chinese-made advanced computing chips — naming Huawei’s Ascend line — anywhere in the world could trigger export-control liability; a notice on the risks of allowing US AI chips to be used for training or running Chinese AI models; and advice to companies on protecting their supply chains against diversion of controlled chips to restricted destinations.
The move left the underlying policy question — how tightly to restrict global access to advanced AI compute — unresolved rather than settled, deferring the tiered system’s replacement to future rulemaking while immediately loosening the restrictions the Diffusion Rule would have imposed on non-adversary countries.