Commerce rescinds the AI Diffusion Rule

Background

The AI Diffusion Rule had a compliance date of 15 May 2025. Two days before that date, on 13 May 2025, Commerce released a press release announcing that it had initiated rescission of the rule.^[1][2] Commerce described the rule as ill-conceived and counterproductive.^[1]

The rescission announcement

Commerce instructed enforcement officials not to enforce the rule.^[1] The agency said its action was meant to ensure the United States remains at the forefront of AI innovation and maintains global AI dominance.^[1] Commerce also said it planned to publish a formal rescission in the Federal Register and to issue a replacement rule later.^[2] Those were stated plans; the announcement itself was not the same as a completed Federal Register rescission.

Guidance issued alongside

Alongside the rescission, BIS issued guidance on three points.^[2][3] First, it stated that using Huawei Ascend chips anywhere in the world would violate US export controls.^[2][3] Second, it warned the public about the consequences of allowing US AI chips to be used to train Chinese AI models.^[2][3] Third, it told US companies how to protect supply chains against diversion tactics.^[2][3] The guidance therefore addressed chip use, model training, and supply-chain protection at the same time as Commerce moved to withdraw the AI Diffusion Rule.

Reaction from China

On 15 May 2025, China's Ministry of Commerce spokesperson He Yongqian said the US was abusing export controls and seriously damaging the legitimate rights of Chinese companies.^[3] Securities Times noted that this was the third US chip or AI export control action against China within less than half a year of the new administration.^[2]

Regulatory status

The GAO later concluded that until the rulemaking is complete, the AI Diffusion framework remains in the Code of Federal Regulations.^[1] That conclusion meant the framework had not yet been removed from the regulatory code by the announcement alone. Commerce had said it planned a formal rescission in the Federal Register and a replacement rule later.^[2] Until those steps were completed, the rule's formal placement and its enforcement posture did not match.

Why it matters

The event combined a withdrawal from one AI rule with continued export-control guidance on Huawei Ascend chips, US AI chips used to train Chinese models, and supply-chain diversion.^[1][2][3] For companies, the practical situation was a rule still listed in the Code of Federal Regulations, an instruction to enforcement officials not to enforce it, and new guidance about chip-related conduct.^[1][2][3] The GAO's conclusion underlined that the formal rulemaking process still mattered even after the rescission announcement.^[1]