Trump's AI action plan intensifies US-China tech rivalry despite chip export concessions

New strategy maintains export controls while accelerating domestic AI infrastructure, as China doubles down on self-reliance

The US-China technology war has entered a new phase with President Donald Trump's comprehensive AI Action Plan, which maintains strict export controls on China while positioning America as an "AI export powerhouse" through aggressive deregulation and infrastructure development.

Released on July 23, 2025, Trump's "Winning the AI Race: America's AI Action Plan" outlines over 90 federal policy actions across three key pillars: accelerating innovation, building American AI infrastructure, and leading in international diplomacy and security. The plan represents the administration's first major AI strategy since Trump's return to office, drawing widespread industry acclaim from tech giants including Nvidia, Amazon, Meta, and Microsoft.

Strategic shift in approach

While Trump's rhetoric marks a subtle departure from predecessor Joe Biden's "small yard, high fence" containment strategy, analysts note that core restrictions remain unchanged. Bo Zhengyuan, a partner at independent research platform Plenum, told South China Morning Post that the administration is framing AI regulation through the lens of global technological competition rather than outright containment.

"What's different is the rhetoric – it's now more head-to-head than containment," Bo explained. "But in practical terms, the export control framework remains largely unchanged from the final days of the Biden administration – if anything, it has expanded."

The 28-page action plan tasks the Commerce Department with closing loopholes in current export restrictions, boosting oversight of end users abroad, and exploring geolocation tools to block access to "countries of concern" including China. This comes despite recent decisions allowing Nvidia and AMD to resume limited exports of advanced AI chips to China.

Key policy initiatives

The plan's cornerstone initiatives include partnering with industry to deliver secure, full-stack AI export packages to allies, expediting permits for data centers and semiconductor fabrication facilities, and removing federal regulations that hinder AI development.

Notably, the plan emphasizes "upholding free speech in frontier models" by updating federal procurement guidelines to ensure government contracts only with developers who maintain objective, bias-free systems.

"America's AI Action Plan charts a decisive course to cement US dominance in artificial intelligence," said White House Office of Science and Technology Policy Director Michael Kratsios. The plan positions AI as "a cornerstone of American innovation, powering a new age of American leadership in science, technology, and global influence."

China's self-reliance strategy

Rather than deterring China's AI ambitions, analysts suggest US measures are accelerating Beijing's push toward technological self-reliance. Export controls have created unique opportunities for domestic Chinese AI chip vendors, who no longer face competition from the most advanced global alternatives in their home market.

Bernstein analysts forecast that domestic chips will capture 55% of China's AI accelerator market by 2027, up dramatically from just 17% in 2023. This growth is driven by ongoing technological advancements and rapid expansion in local 7-nanometer production capabilities.

Huawei's Ascend 910C, currently the top domestic performer, achieves approximately 65% of Nvidia's H100 capacity. While Chinese accelerators still trail top-tier Western chips in raw power, they increasingly match the performance of downgraded chips specifically designed for the Chinese market, such as Nvidia's H20.

Industry transformation

The transformation extends beyond hardware to encompass China's entire AI ecosystem. Despite computing power constraints imposed by US chip controls, China's data resources, algorithms, and AI talent remain competitive with American capabilities.

"AI isn't something that can be built overnight through policy support alone – it's a long game shaped by engineering, talent, and infrastructure," Bo noted. He predicts that by 2027, China's AI industry could transition from being supply-constrained to demand-constrained, potentially putting downward pressure on chip prices.

Looking ahead

The intensifying competition reflects broader geopolitical tensions, with both nations viewing AI dominance as crucial to economic and national security. Trump's plan, released ahead of high-level trade talks between Washington and Beijing, signals America's commitment to maintaining technological leadership while China continues building its autonomous AI capabilities.

As Bo concluded: "There won't be a clear winner or loser in the next decade." The prolonged competition suggests that rather than decisive victory by either side, the global AI landscape will likely evolve into distinct technological ecosystems, each serving different markets and strategic objectives.

The stakes remain enormous, with AI technology increasingly viewed as foundational to future economic growth, military capabilities, and global influence in the digital age.