President Donald Trump is rewriting the rules on who gets America’s top AI chips, and he’s doing it his way. According to a report by Reuters on Wednesday, the new White House is taking aim at a Biden-era regulation that divided countries into three groups, each with different access to advanced semiconductors.
The rule, dropped in January by the Department of Commerce, was built to keep high-powered AI chips in the hands of US allies and away from countries Washington doesn’t trust. Now, Trump wants to blow that whole thing up.
The rule’s official name is the Framework for Artificial Intelligence Diffusion. It was introduced just a week before Biden left office. US companies have to follow it starting May 15. Right now, 17 countries plus Taiwan are in Tier 1, which gives them unlimited access to the best chips.
Tier 2 includes about 120 nations that are capped on how many chips they can buy. Tier 3 blocks out China, Russia, Iran, North Korea, and a few others completely.
Trump team plans licensing system to replace tiers
Instead of that system, the Trump administration is working on a full overhaul. The plan is to replace the tier structure with country-to-country licensing deals. The idea is to ditch the global access tiers and use US chip exports as leverage in direct trade talks.
Former Commerce Secretary Wilbur Ross, who ran the department under Trump’s first term, confirmed this direction. “There are some voices pushing for elimination of the tiers,” Wilbur said on Tuesday. “I think it’s still a work in progress.” He added that government-to-government agreements are one option being considered.
The plan tracks with Trump’s style of foreign policy. Instead of relying on big alliances or blanket rules, he prefers to make individual deals. The change would let Washington use chip access as a pressure point in other trade negotiations.
And the current Commerce Secretary Howard Lutnick has already said publicly, during a March conference, that he wants export controls included in US trade discussions.
But there’s more. The new plan could also shrink the limit on chip orders that are allowed without a license. At the moment, any sale under 1,700 Nvidia H100 chips only needs to be reported, but no special approval is required. That could change.
One government official involved said the new cutoff being considered is 500 chips. If that happens, more orders will trigger the license requirement, giving the US more control over what’s leaving the country.
Industry, lawmakers, and Trump allies want changes fast
The current rule isn’t just under attack from Trump. The tech industry and some Republican senators are also tearing into it. Ken Glueck, executive VP at Oracle, thinks the tiers are nonsense. “Wouldn’t surprise me they’re going to take a new look at this,” Ken reportedly told Reuters.
“Israel and Yemen are both in the second tier,” he added, pointing out how the rule doesn’t seem to line up with US national interests. Ken didn’t know the full details of Trump’s plan, but said changes were clearly coming.
When the regulation was first introduced in January, both Oracle and Nvidia pushed back. They warned the rule would backfire. By cutting countries off, the US would basically be handing its global business to China. With fewer American chips on the market, other nations—especially the ones stuck in Tier 2—might just turn to China for cheaper alternatives.
That’s also what Republican lawmakers are saying. In mid-April, seven senators signed a letter to Lutnick demanding that the rule be rolled back. They said the policy would force buyers to “turn to China’s unregulated cheap substitutes.” The senators argued that the rule punishes countries that might otherwise want to partner with the US, just because they don’t fall in the first-tier group.
Behind all of this is Trump’s push to “make the rule stronger but simpler,” a phrase his officials keep using. But not everyone agrees that ripping out the tiers will actually simplify things.
Some experts think the licensing system will be harder to manage and could create delays and confusion. Still, the Trump administration seems set on giving the US more control over who gets access and why.
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