The Trump administration has announced plans to rescind and replace a Biden-era policy that restricted the export of advanced artificial intelligence (AI) chips. The original regulation, issued in January 2025, aimed to limit China’s access to sophisticated AI technology by categorizing countries into three tiers, determining chip access levels. China and other adversaries were placed in the most restrictive tier.

Critics of the Biden-era rule, including Trump administration officials, argue that the tiered system is overly complex and obstructive to American innovation. The Commerce Department described the rule as “unenforceable” and plans to replace it with a simplified global licensing framework based on government-to-government agreements.

While the exact timeline for the policy overhaul remains unclear, the Biden-era rule was scheduled to go into effect on May 15. The announcement has had immediate market implications, with Nvidia’s shares initially rising by 3% before dropping slightly in after-hours trading.

This policy shift reflects the Trump administration’s broader approach to trade and technology, emphasizing the need to streamline regulations to promote American innovation while maintaining national security interests.

Source: Reuters