The United States and China now run competing export control regimes aimed at the same technology. Washington restricts advanced AI chips and chipmaking equipment through the Export Administration Regulations (EAR), enforced by the Bureau of Industry and Security (BIS) and the Department of Justice. Beijing restricts rare earths and other critical minerals under its 2020 Export Control Law, administered by the Ministry of Commerce (MOFCOM). This piece traces how those controls grew from October 2022 to 2026, and why so much of the contest now happens in license reviews and ECCN classifications.
The most consequential border in the world right now runs through a wafer of silicon roughly the size of a postage stamp, etched with billions of transistors, and it is policed by a growing army of lawyers, compliance officers, customs agents and intelligence analysts on both sides of the Pacific.
It shows up in the footnotes of an export license, in the line items of a quarterly earnings call, and more and more often in indictments filed by the U.S. Department of Justice.
In December 2025, the Justice Department announced Operation Gatekeeper and unsealed court documents against a network of three individuals and a company accused of exporting, or trying to export, at least $160 million of Nvidia H100 and H200 GPUs to mainland China, Hong Kong and other destinations. A month later, BIS announced a $1.5 million settlement with Exyte Management GmbH of Stuttgart, Germany, whose Chinese subsidiary, Exyte Shanghai, had shipped about 884 EAR99 items used in chip fabrication (flowmeters, pressure transmitters, controllers) to SMIC Beijing, a foundry on the Entity List. Meanwhile, in Beijing, MOFCOM was doing the mirror image of the same work: licensing, denying and weaponizing access to the rare earth elements that every high-end chip, missile guidance system and electric vehicle motor depends on.
Welcome to the new iron curtain. It is invisible and bureaucratic, and it is being drafted in real time.
How do US export controls work?
US export controls on technology run through two parallel regimes, with Treasury sanctions layered on top. For most of the post-Cold War era, “export controls” lived in a sleepy corner of the U.S. regulatory state. They were the province of defense contractors, ITAR lawyers in Northern Virginia, and a small guild of compliance specialists who knew the difference between an ECCN and EAR99 the way sommeliers know vintages.
The architecture is arcane. On the U.S. side, two regimes do most of the work:
- The International Traffic in Arms Regulations (ITAR), administered by the State Department’s Directorate of Defense Trade Controls (DDTC), govern anything on the United States Munitions List (USML): fighter jets, night-vision optics, missile components and, increasingly, the software that runs them.
- The Export Administration Regulations (EAR), administered by BIS at the Commerce Department, govern “dual-use” items on the Commerce Control List (CCL). Each listed item gets an Export Control Classification Number (ECCN). Anything that doesn’t fit a specific ECCN falls into the catch-all category EAR99, which sounds harmless but can still trigger restrictions depending on destination, end-user or end-use.
On top of both sits the Treasury Department’s Office of Foreign Assets Control (OFAC), which enforces sanctions and maintains the lists of specially designated nationals and blocked persons. (For the practical question of which regime covers a given product, see is my product ITAR or EAR, and what does getting it wrong cost.)
The legal backbone goes back decades (the Arms Export Control Act, the Export Control Reform Act of 2018, the Export Control Act), but for most of that history the rules were treated as a checklist.
That has changed completely. Export control is now a boardroom issue at every AI lab, every hyperscaler, every chip designer, and increasingly every venture capitalist who funds them. The reason is simple. Washington has decided that semiconductors and the AI systems they enable are the commanding heights of 21st-century power, and Beijing has decided to fight back with the only chokehold of comparable strength it owns.
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How has the US restricted China’s access to advanced chips since 2022?
The US campaign against China’s access to advanced chips began in October 2022, well before the Trump administration’s recent moves, when the Biden-era BIS issued the first sweeping controls on advanced logic chips and the equipment used to make them. The strategy was a textbook “small yard, high fence”: narrow the scope to the most advanced technology, then build the highest possible wall around it.
Over the next two years the wall grew. BIS added more PRC entities to the Entity List, strengthened technology-based and country-based controls on advanced chips and semiconductor manufacturing equipment, and negotiated with Japan and the Netherlands to align controls on extreme ultraviolet and deep ultraviolet lithography tools. The U.S. went after high-bandwidth memory, advanced packaging, and even “node-agnostic” equipment that could serve both legacy and leading-edge production. The CHIPS and Science Act put tens of billions of dollars into domestic fab construction so the offense had a home team.
Then came the AI Diffusion Rule of January 2025, a globally ambitious framework that sorted countries into three tiers. The United States and 18 close partners were exempt from licensing, most of the world fell under a “verified end-user” data center program with per-company compute caps, and adversary nations were effectively cut off. It was the closest thing yet to a worldwide export control regime for compute itself.
It didn’t last. The incoming Trump administration scrapped it and produced something stranger and more contested. On January 13, 2026, BIS issued a final rule (published in the Federal Register on January 15) that moved license review for certain advanced AI chips bound for China and Macau, such as the Nvidia H200 and AMD MI325X, from a presumption of denial to case-by-case review, provided exporters meet a battery of supply, security and third-party testing conditions. The next day, President Trump signed a proclamation imposing a 25% tariff under Section 232 of the Trade Expansion Act of 1962 on imports of certain advanced chips in the same performance class. In practice, that tariff works as a tollbooth on H200-class shipments to China.
The Council on Foreign Relations called the result strategically incoherent: likely to block most exports if implemented faithfully, but failing to address the core national security concerns if implemented loosely. Critics in Congress are blunter. At a January 2026 House Foreign Affairs Committee hearing titled “Winning the AI Race Against the Chinese Communist Party,” former Deputy National Security Advisor Matt Pottinger argued that Congress needs to step in, reverse the policy and put durable guardrails in place.
The committee is doing exactly that. A stack of bills (the Chip Security Act, the MATCH Act, the Export Controls Enforcement Act and the BIS STRENGTH Act) is moving through markup, each designed to tighten the screws, multilateralize the controls with allies, or both. The Chip Security Act would require companies to verify that semiconductors used in AI stay in authorized locations, an idea that comes close to putting GPS-style tracking on individual chips.
How is China using export controls in response?
China is answering US chip controls with export controls of its own on rare earths and other critical minerals. For years, the conventional wisdom was that China had no real response. Chips were Washington’s lever; what could Beijing possibly hold back?
Quite a lot, it turns out.
China’s Export Control Law, passed in 2020 and steadily expanded since, gave MOFCOM the legal basis to build its own export control list. And China holds a near-monopoly in materials the modern economy cannot do without. According to a multi-institutional analysis published this year, China controls roughly 90% of global rare earth processing, 80% of tungsten and 60% of antimony. Those are the raw inputs to magnets, missiles, jet engines, batteries, semiconductors and night vision.
On October 9, 2025, twenty-four hours before President Trump canceled a planned meeting with President Xi at the APEC summit, MOFCOM issued a coordinated set of announcements (Nos. 55 through 62) that made up the most extensive tightening of China’s rare earth rules to date. The most striking provision required foreign companies to get Chinese government approval to export dual-use items containing even trace amounts of certain Chinese-origin rare earths, including goods such as semiconductor and AI components made outside China. Beijing had, in effect, written its own version of the U.S. Foreign Direct Product Rule and pointed it back at Washington.
The effect was immediate. Rare earth magnet exports to the United States dropped 59% in April 2025, forcing automakers including Ford to suspend production at several factories. Chinese tungsten exports fell nearly 14% in the first nine months of 2025. Western buyers watched their license approval rates collapse.
Then came a partial thaw. After a Trump–Xi summit in South Korea, China agreed to pause six of the October announcements until November 10, 2026. The suspension still left a long list of controls in force, including the ban on dual-use exports to U.S. military end users and the controls on tungsten, tellurium, bismuth, molybdenum and indium. Days later, MOFCOM announced fresh controls on silver, antimony and tungsten for 2026 and 2027, formally framed as measures to protect resources and the environment.
The pattern is clear. Beijing isn’t weaponizing scarcity; it’s weaponizing control. By tightening and loosening access in cycles, it keeps pricing power, extracts strategic concessions, and slows the growth of competing supply chains. It is the export control playbook turned into a thermostat.
How are chip export controls enforced?
Chip export controls are enforced in the weeds: in shipping manifests, in customs declarations, and in the line-by-line classification of which chip belongs to which ECCN. The leaders’ summits make the headlines, but this is where the actual fight happens.
The U.S. side has been on a tear. Beyond Operation Gatekeeper, prosecutors have targeted what BIS guidance calls “red flags” of diversion: controlled chips misclassified as EAR99, sales to companies with no apparent history of using the items, freight forwarders listed as the ultimate consignees, and payments from entities not on the bill of sale. The schemes typically route through third countries such as Singapore, Malaysia and the UAE, where chip smuggling is reportedly widespread and gray-market resellers feed a lucrative trade. (For how companies get the ECCN right in the first place, see how companies self-classify under the EAR, with semiconductor examples.)
In April 2026, the White House Office of Science and Technology Policy went further and publicly accused China and other foreign nations of deliberate, industrial-scale campaigns to distill U.S. frontier AI systems. The charge has reopened the debate over whether AI model weights themselves should join the Commerce Control List.
It’s a serious question. If a 700-billion-parameter model can be carried out on a hard drive, the whole idea of “export controls on physical goods” starts to wobble. The next round of the export control reform debate will almost certainly have to deal with software, weights and even inference services as controlled commodities.
What does this mean for companies and compliance teams?
For the companies caught in the middle, all of this has produced a strange new economy. There is now a busy market for export compliance consultants, export compliance software, export control training, export control lawyers, and full-time export control office staff at firms that, ten years ago, would not have known what an ECCN was.
Job boards are full of export compliance postings at AI startups, cloud providers and chip designers, companies that used to think of themselves as software shops. Every serious AI lab now maintains an export compliance manual. Every shipment of an H200 or MI325X gets a license review, a Know Your Customer screen and an end-use certification. Every cloud contract with a foreign customer gets vetted for whether it would count as a deemed re-export.
For the AI engineer who just wants to ship a model, or the DevOps team that wants to spin up GPUs in a Singapore region, this can feel like an absurd amount of friction. But the friction is the point. The friction is the policy.
What comes next for semiconductor export controls?
Three things about semiconductor export controls are becoming clear as 2026 goes on.
First, containment by hardware alone is showing its limits. As Chatham House noted earlier this year, gains in AI depend less and less on raw compute alone: better algorithms, more efficient model architectures and inference optimization can substitute for hardware. China is also moving fast on domestic substitution. TrendForce projects that in 2026 the domestic share of China’s AI chip market will reach 50%, with Huawei, Alibaba, Baidu and Cambricon all shipping in volume.
Second, the controls are becoming multilateral, or at least trying to. The MATCH Act and parallel diplomatic efforts aim to make sure that when Washington tightens a screw, Tokyo, The Hague, Seoul and Berlin tighten theirs in step. Whether that holds under economic pressure is one of the open questions of the decade.
Third, the regime is expanding from things you can hold to things you can copy. Software, model weights, training data and cloud access are all creeping inside the regulatory perimeter. The “American AI Action Plan” announced in mid-2025 explicitly called for promoting “full-stack AI export packages” to allies while exploring location verification features in shipments of advanced chips to prevent diversion to adversaries. The endgame is a world in which compute itself is a controlled good: measured, licensed, geofenced and accountable.
The world the controls are building
The original Iron Curtain was made of barbed wire, watchtowers and minefields. It separated economies that were already cleaved by ideology and trade.
The new one runs through a deeply integrated global economy that neither Washington nor Beijing actually wants to dismantle. It separates technologies, and the people, companies and institutions allowed to touch them.
Whether this curtain will hold, leak, or be redrawn at every summit and every election, no one can say. What is no longer in doubt is that the next decade of geopolitics will be written less in treaties than in ECCN classifications, license denials, MOFCOM announcements, and the paper-trail-heavy work of the world’s least glamorous regulators.
The compliance officer is the new diplomat. The export license is the new passport. And somewhere in a clean room in Hsinchu or Phoenix or Dresden, the next inch of the curtain is being etched in silicon, one transistor at a time.
Frequently asked questions
What is the difference between ITAR and the EAR?
The International Traffic in Arms Regulations (ITAR) are administered by the State Department’s Directorate of Defense Trade Controls and cover items on the United States Munitions List, such as fighter jets, night-vision optics and missile components. The Export Administration Regulations (EAR) are administered by BIS at the Commerce Department and cover dual-use items on the Commerce Control List, each identified by an ECCN.
What is EAR99, and can EAR99 items still be restricted?
EAR99 is the catch-all category for items subject to the EAR that don’t fit a specific ECCN. EAR99 items can still need a license depending on destination, end-user or end-use. In January 2026, for example, BIS settled with Exyte for shipping EAR99 chip-fabrication items to SMIC Beijing, an Entity List foundry.
What did BIS change for AI chip exports to China in January 2026?
On January 13, 2026, BIS issued a final rule moving license review for certain advanced AI chips bound for China and Macau, such as the Nvidia H200 and AMD MI325X, from a presumption of denial to case-by-case review. Exporters must meet supply, security and independent US-based testing conditions. A day later, a Section 232 proclamation imposed a 25% tariff on imports of certain advanced chips.
What was Operation Gatekeeper?
Operation Gatekeeper is a US Justice Department case announced in December 2025 against three individuals and a company accused of exporting, or trying to export, at least $160 million of Nvidia H100 and H200 GPUs to mainland China, Hong Kong and other destinations.