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   Trump Wasted No Time Derailing His Own AI Plan   
      
   The president is setting America back in a race he desperately wants to   
   win.   
   Donald Trump shattering a computer ship with his finger   
   Illustration by The Atlantic. Sources: Chip Somodevilla / Getty; Getty.   
      
   President Donald Trump recently released his plan for the United States to   
   win the global race for AI dominance. The document has some good ideas   
   about expanding domestic infrastructure, encouraging other countries to   
   adopt American AI models, and imposing export controls on advanced   
   semiconductor chips. But over the past few months, Trump has undermined his   
   own goals and ceded much of America’s leverage to foreign powers. By   
   setting the U.S. back in the AI race, he has created a host of strategic   
   vulnerabilities that will bedevil future presidents.   
      
   This backsliding is the result of a rapid ideological shift within the   
   administration, which two men in particular have spurred: David Sacks,   
   Trump’s tech-billionaire AI czar, and Jensen Huang, the CEO of Nvidia and   
   one of America’s most powerful executives in the industry. To trace their   
   growing influence on Trump, consider Nvidia’s H20 chip.   
      
   In late 2023, Nvidia designed the H20 chip specifically for the Chinese   
   market—a legal workaround to export controls that President Joe Biden had   
   imposed. Nearly a year before the H20 was brought to market, OpenAI   
   released a transformative large language model called o1, which employs the   
   same kind of complex reasoning that the H20 chips were built to power.   
   Practically overnight, the chips handed Beijing a significant competitive   
   advantage. Biden was planning to outlaw their export to China but left   
   office before he could. In April, Trump enacted the ban himself.   
      
   Around this time, the balance of power in the Trump administration began to   
   tilt toward Sacks, who saw the H20 ban as counterproductive, both   
   strategically and economically. He gradually gained a bureaucratic   
   advantage: The right-wing provocateur Laura Loomer persuaded Trump to fire   
   David Feith, an ideological opponent of Sacks who ran a directorate at the   
   National Security Council focused on technology. The NSC itself was   
   weakened and hollowed out. And, earlier this summer, the administration   
   gutted the State Department’s “tech envoy” office, which had supported   
   export controls.   
      
   Read: Donald Trump is fairy-godmothering AI   
      
   Then, last month, Trump met with Huang in the White House. By this point,   
   support within the administration for export controls had considerably   
   softened, thanks in part to Sacks. Trump decided to lift the restrictions   
   on the H20 chips, allowing their sale to China. Some observers assumed that   
   the reversal was part of a trade deal and expected Beijing to offer some   
   concession in return. But China insisted that Trump had made the decision   
   unilaterally. Indeed, one day after Trump’s announcement, the country   
   imposed new export controls on electric-vehicle batteries.   
      
   In effect, the U.S. gave away leverage to China and got nothing back. But   
   Sacks and Huang have defended the decision. They have argued that the sale   
   of H20 chips in China would make the country dependent on American chips   
   rather than encourage Chinese companies such as Huawei to develop their   
   own. As Sacks put it, “We can deprive Huawei of having this giant market   
   share in China that they can then use to scale up and compete globally.” He   
   credited Huang for “making the case publicly for competing in China, and   
   there are a lot of merits to the argument.” (Left unmentioned was Huang’s   
   obvious profit motive of selling his company’s chips in one of the world’s   
   biggest markets.)   
      
   Their case is predicated on an unproven assumption: that China would   
   otherwise be able to produce enough chips to compete internationally. In   
   June, though, a senior Trump-administration official testified to Congress   
   that Huawei would be able to produce only 200,000 chips this year—not   
   enough to meet domestic demand, let alone keep pace with America. That’s   
   not for lack of trying. Beijing has spent about $150 billion since 2014 to   
   expand its chip-making capacity. But it still can’t make enough to equip a   
   data center capable of training the most advanced AI models. The quality of   
   China’s chips also lagged behind that of Nvidia’s.   
      
   Instead of hindering China, Trump’s H20 reversal bailed it out. The country   
   already had a largely superior electrical grid compared with America’s, and   
   is likely to be able to construct data centers more quickly. Its crucial   
   shortcoming was computing power, which requires lots and lots of advanced   
   chips. Now, thanks to the Trump administration, China is getting them.   
      
   Democrats rebuked the decision, and so did many Republicans. Late last   
   month, 20 national-security experts—including Feith; Matt Pottinger,   
   Trump’s former deputy national security adviser; and several conservatives   
   sympathetic to Trump—sent a letter to the administration calling the H20   
   reversal “a strategic misstep that endangers the United States’ economic   
   and military edge in artificial intelligence.” Steve Bannon, Trump’s former   
   strategist, was less restrained in his critique. “American companies spent   
   decades being made fools of, getting duped by the Chinese Communist Party   
   transferring the crown jewels of our technology. For that they got   
   nothing,” Bannon told the Financial Times. “Unbelievably, the government is   
   poised to make the same humiliating mistake, at the behest of companies   
   that want to drive their own profits with zero concerns for the nation’s   
   security.”   
      
   The H20 decision was not an isolated case. In May, Trump announced deals   
   with the United Arab Emirates and Saudi Arabia to build some of the world’s   
   most advanced AI data centers on their soil. Some will be owned and run by   
   American companies; others will be owned by local AI firms—Group 42 in the   
   UAE and Humain in Saudi Arabia. Crucially, Trump also rescinded the Biden   
   administration’s “diffusion rule,” which sought to limit the export of   
   advanced AI chips and models. The move cleared the way for the UAE to   
   import hundreds of thousands of Nvidia’s chips. Saudi Arabia is set to   
   deploy a smaller number of Nvidia chips, but it has ambitions to expand its   
   capacity.   
      
   Unlike Trump, Biden seemed to understand that compute, the processing power   
   needed to train advanced AI, is a scarce strategic asset that should be   
   concentrated in the United States or its most trusted allies. The Biden   
   administration also recognized that China might use its close ties to   
   countries such as the UAE to access advanced chips. Even worse, China could   
   acquire the “model weights” of advanced AI—the parameters that dictate how   
      
   [continued in next message]   
      
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