The Trump administration has officially rescinded the Biden administration's Artificial Intelligence (AI) Diffusion Rule, which was slated to take effect on May 15. Introduced by former President Joe Biden in January, the rule aimed to limit the export of U.S.-made AI chips to several countries for the first time, while also tightening existing restrictions. On Tuesday, the U.S. Department of Commerce (DOC) announced that it had instructed its staff not to enforce the rule. Instead, the department plans to introduce a new regulation in the future, focusing on direct negotiations with individual countries rather than blanket export restrictions, according to Bloomberg. Biden's rule categorized countries into three tiers, each with different levels of restriction: - Tier 1 countries, such as Japan and South Korea, would have faced no new export limitations. - Tier 2 regions, including Mexico and Portugal, would have experienced their first chip export restrictions. - Tier 3 countries, such as China and Russia, would have seen tightening of existing controls. In place of the withdrawn regulations, the DOC released interim guidance for industry stakeholders. This guidance reiterates that using Huawei’s Ascend AI chips anywhere globally is a violation of U.S. export rules. It also warns companies against allowing U.S. AI chips to be used in training AI models in China and suggests methods to secure chip supply chains from diversion tactics. U.S. Secretary of Commerce for Industry and Security, Jeffrey Kessler, stated, "The Trump Administration will pursue a bold, inclusive strategy to share American AI technology with trusted foreign nations, while ensuring it does not fall into the hands of our adversaries. We reject the Biden Administration’s misguided and ineffective AI policies." This action marks a significant shift in the U.S. approach to AI technology and international trade, with the Trump administration favoring a more flexible and diplomatic solution over rigid export controls. The rescission of the rule is likely to impact global semiconductor markets and international relations, particularly with Tier 3 countries like China and Russia. The DOC's guidance, however, aims to maintain some level of regulation and oversight while the new rules are being developed.