Implications of the potent new Chinese AI app for Washington
The sudden emergence of a new Chinese AI has sparked significant questions regarding Trump's AI policy.
TroibNews 
A relatively unknown Chinese artificial intelligence startup made waves in the tech industry this weekend by launching an OpenAI-like assistant, which quickly rose to the top spot on Apple’s app store, causing stocks of major American tech companies to decline.
From Washington's viewpoint, this development triggered immediate policy concerns: it occurred despite ongoing bipartisan efforts to hinder AI advancements in China.
Both President Donald Trump and former President Joe Biden have prioritized global competition—with a focus on sidelining China—as central elements of their tech and AI strategies. Yet, a small and agile Chinese firm has managed to leap ahead regardless.
The major concern surrounding DeepSeek’s R1 model is its ability to replicate—and in some instances, outshine—the performance of OpenAI’s state-of-the-art o1 product across numerous benchmarks, all while costing a fraction of the price.
The business implication is clear. DeepSeek’s success indicates that American companies may not need to invest as heavily as anticipated to create AI models, which both fascinates and unsettles investors and tech leaders alike.
Some, such as Microsoft CEO Satya Nadella, welcomed the perceived commodification of AI—a future where many companies can use the technology at a much lower cost. However, investors appeared skeptical: many tech stocks fell, particularly the highly valued chipmaker Nvidia, a primary beneficiary of the current AI infrastructure surge.
The policy ramifications are more intricate. Washington’s intense focus on surpassing China has led to measures that the industry views with mixed sentiments.
On one hand, many tech firms disapprove of export controls that limit their sales to the world's second-largest economy and compel them to innovate new products to engage with China. If DeepSeek illustrates that these regulations are ineffective, many in the industry would be pleased to see them repealed.
Conversely, the anti-China protectionist sentiment has prompted Washington to adopt a host of industry-friendly measures, including a more flexible attitude toward AI regulations and streamlined permitting for related construction projects. Does DeepSeek insinuate that these efforts are also failing, or will it provoke a renewed commitment?
DeepSeek’s achievements challenge the notion that the future of American AI relies on ever-increasing chips and power, complicating Trump’s ambitions for rapid infrastructure development in the U.S.
Why invest $500 billion in the Trump-backed “Stargate” mega project, and why would the market reward firms like Meta for spending $65 billion within just one year on AI, if DeepSeek claims it only needed $5.6 million and second-tier Nvidia chips to train a recent model?
“The leading American companies are all part of this phenomenon whereby AI models continuously get smaller, faster, cheaper,” noted Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies think tank.
He highlights the potential for DeepSeek’s techniques, powered by superior equipment, to accelerate American AI advancement: “If DeepSeek is kind of illustrative of the floor of capabilities being raised—what do you get for not that much money—in parallel, there is this phenomenon of the ceiling being raised.”
Tech firms are enthusiastic about the recent influx of federal support, and they are unlikely to abandon their push for increased government investment in AI anytime soon. Marc Andreessen, a venture capitalist and Trump ally, suggested that DeepSeek should be regarded as “AI’s Sputnik moment,” amplifying the stakes in the global competition.
This strengthens the argument that some American AI companies are advocating for the new administration to allocate government resources to AI infrastructure, tighten restrictions on China, and loosen regulations to facilitate their developers in achieving "artificial general intelligence" before their geopolitical competitors.
David Sacks, fellow VC and Trump’s AI czar, invoked the model to bolster Trump’s strategy while criticizing the Biden administration for creating excessive obstacles to AI development.
“DeepSeek R1 shows that the AI race will be very competitive and that President Trump was right to rescind the Biden EO,” Sacks wrote on X. “I’m confident the U.S. can lead, but we can’t afford to be complacent.”
It is too soon to predict Congress's response, but history offers some insights. In various respects, DeepSeek echoes another significant tech breakthrough from Beijing that caught both policymakers and Silicon Valley off guard: when Huawei, in 2023, appeared to sidestep U.S. sanctions by launching a smartphone using a 7-nanometer chip, the most advanced chip China had produced at that time.
Similar to that rollout, which coincided with then-Commerce Secretary Gina Raimondo’s visit to China, DeepSeek may be delivering a timely message to the Trump administration. In a previous interview, DeepSeek’s CEO indicated that the primary challenge facing his company is export controls. Trump has directed agencies to examine existing restrictions for potential loopholes and to report back by April 1.
“The story is the same in both cases, which is that the technology is legitimate and impressive, but the timing is politically motivated,” remarked Allen. “[This] is an attempt to try and change the political narrative in a new presidential administration—to try and say export controls have already failed, we should give up on them. That is the plan here.”
That approach backfired during the Huawei chip debacle. If anything, Congressional hawks have become more resolute in reinforcing a tougher stance against Chinese tech breakthroughs circumventing U.S. restrictions.
Allen argues there is reason to maintain pressure on China, as the innovation at DeepSeek primarily stems from a technical mechanism: “They have this architecture that allows them to extract more IQ points per chip.”
When applied across China’s limited chip resources versus a vast supply, this results in a significant intelligence advantage for the U.S.
According to this rationale, as long as the U.S. continues to deny China access to valuable American technology and addresses their workarounds, it will retain the upper hand.
“Their improvements—architectural and algorithmic—are available to Western countries. And our advantages of superior chip architecture remain denied to them,” Allen stated.
The development of DeepSeek could suggest that U.S. export controls require more time to take effect, rather than indicating they have failed.
“Right now, particularly with the stock market behaving the way it is, we're really at peak freak out,” Bill Drexel, a fellow at the Center for a New American Security, told PMG Tech host Steven Overly. “[China] has gone a lot faster than we expected. They've closed more gaps than we anticipated, but it’s still going to be difficult for them to compete in the years ahead.”
Steven Overly contributed to this report.
Olivia Brown contributed to this report for TROIB News
From Washington's viewpoint, this development triggered immediate policy concerns: it occurred despite ongoing bipartisan efforts to hinder AI advancements in China.
Both President Donald Trump and former President Joe Biden have prioritized global competition—with a focus on sidelining China—as central elements of their tech and AI strategies. Yet, a small and agile Chinese firm has managed to leap ahead regardless.
The major concern surrounding DeepSeek’s R1 model is its ability to replicate—and in some instances, outshine—the performance of OpenAI’s state-of-the-art o1 product across numerous benchmarks, all while costing a fraction of the price.
The business implication is clear. DeepSeek’s success indicates that American companies may not need to invest as heavily as anticipated to create AI models, which both fascinates and unsettles investors and tech leaders alike.
Some, such as Microsoft CEO Satya Nadella, welcomed the perceived commodification of AI—a future where many companies can use the technology at a much lower cost. However, investors appeared skeptical: many tech stocks fell, particularly the highly valued chipmaker Nvidia, a primary beneficiary of the current AI infrastructure surge.
The policy ramifications are more intricate. Washington’s intense focus on surpassing China has led to measures that the industry views with mixed sentiments.
On one hand, many tech firms disapprove of export controls that limit their sales to the world's second-largest economy and compel them to innovate new products to engage with China. If DeepSeek illustrates that these regulations are ineffective, many in the industry would be pleased to see them repealed.
Conversely, the anti-China protectionist sentiment has prompted Washington to adopt a host of industry-friendly measures, including a more flexible attitude toward AI regulations and streamlined permitting for related construction projects. Does DeepSeek insinuate that these efforts are also failing, or will it provoke a renewed commitment?
DeepSeek’s achievements challenge the notion that the future of American AI relies on ever-increasing chips and power, complicating Trump’s ambitions for rapid infrastructure development in the U.S.
Why invest $500 billion in the Trump-backed “Stargate” mega project, and why would the market reward firms like Meta for spending $65 billion within just one year on AI, if DeepSeek claims it only needed $5.6 million and second-tier Nvidia chips to train a recent model?
“The leading American companies are all part of this phenomenon whereby AI models continuously get smaller, faster, cheaper,” noted Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies think tank.
He highlights the potential for DeepSeek’s techniques, powered by superior equipment, to accelerate American AI advancement: “If DeepSeek is kind of illustrative of the floor of capabilities being raised—what do you get for not that much money—in parallel, there is this phenomenon of the ceiling being raised.”
Tech firms are enthusiastic about the recent influx of federal support, and they are unlikely to abandon their push for increased government investment in AI anytime soon. Marc Andreessen, a venture capitalist and Trump ally, suggested that DeepSeek should be regarded as “AI’s Sputnik moment,” amplifying the stakes in the global competition.
This strengthens the argument that some American AI companies are advocating for the new administration to allocate government resources to AI infrastructure, tighten restrictions on China, and loosen regulations to facilitate their developers in achieving "artificial general intelligence" before their geopolitical competitors.
David Sacks, fellow VC and Trump’s AI czar, invoked the model to bolster Trump’s strategy while criticizing the Biden administration for creating excessive obstacles to AI development.
“DeepSeek R1 shows that the AI race will be very competitive and that President Trump was right to rescind the Biden EO,” Sacks wrote on X. “I’m confident the U.S. can lead, but we can’t afford to be complacent.”
It is too soon to predict Congress's response, but history offers some insights. In various respects, DeepSeek echoes another significant tech breakthrough from Beijing that caught both policymakers and Silicon Valley off guard: when Huawei, in 2023, appeared to sidestep U.S. sanctions by launching a smartphone using a 7-nanometer chip, the most advanced chip China had produced at that time.
Similar to that rollout, which coincided with then-Commerce Secretary Gina Raimondo’s visit to China, DeepSeek may be delivering a timely message to the Trump administration. In a previous interview, DeepSeek’s CEO indicated that the primary challenge facing his company is export controls. Trump has directed agencies to examine existing restrictions for potential loopholes and to report back by April 1.
“The story is the same in both cases, which is that the technology is legitimate and impressive, but the timing is politically motivated,” remarked Allen. “[This] is an attempt to try and change the political narrative in a new presidential administration—to try and say export controls have already failed, we should give up on them. That is the plan here.”
That approach backfired during the Huawei chip debacle. If anything, Congressional hawks have become more resolute in reinforcing a tougher stance against Chinese tech breakthroughs circumventing U.S. restrictions.
Allen argues there is reason to maintain pressure on China, as the innovation at DeepSeek primarily stems from a technical mechanism: “They have this architecture that allows them to extract more IQ points per chip.”
When applied across China’s limited chip resources versus a vast supply, this results in a significant intelligence advantage for the U.S.
According to this rationale, as long as the U.S. continues to deny China access to valuable American technology and addresses their workarounds, it will retain the upper hand.
“Their improvements—architectural and algorithmic—are available to Western countries. And our advantages of superior chip architecture remain denied to them,” Allen stated.
The development of DeepSeek could suggest that U.S. export controls require more time to take effect, rather than indicating they have failed.
“Right now, particularly with the stock market behaving the way it is, we're really at peak freak out,” Bill Drexel, a fellow at the Center for a New American Security, told PMG Tech host Steven Overly. “[China] has gone a lot faster than we expected. They've closed more gaps than we anticipated, but it’s still going to be difficult for them to compete in the years ahead.”
Steven Overly contributed to this report.
Olivia Brown contributed to this report for TROIB News
