President Trump finds himself in a tight spot.
In the global competition over artificial intelligence (AI), he faces mounting pressure to restrict American technology from foreign adversaries while also acknowledging that US chip manufacturers are at the forefront worldwide.
Trump prioritized technology policy during his recent visit to the Middle East, where he finalized a multi-billion-dollar AI agreement involving US firms and Gulf nations.
The White House contended that this investment would enhance the global presence of American tech companies, yet selling AI chips to Gulf countries raised national security alarms back home.
“The Trump administration is trying to navigate a tricky geopolitical situation,” said emerging technology and geopolitical expert Tobias Fekin. “We want to curb the global impact of our high-tech leaders without hindering China’s ambitions in AI.” This balancing act grows increasingly complex as global supply chains and research collaborations become more interconnected.
Gulf trades trigger scrutiny
This backlash underscores the challenges the White House faces in managing innovation alongside national security.
AI chips are crucial in the race for AI dominance. They are specifically designed to handle functions that traditional chips can’t manage.
Washington is getting more cautious about how American technology is handled, particularly concerning potential third-party transactions involving China. Both the Biden and Trump administrations have tightened export controls on sophisticated chips in response to these concerns.
Fears intensified among lawmakers and officials earlier this year after a new high-performance AI model was launched by Chinese startup Deepseek.
Reports indicate that, despite stricter export regulations, US-made chips are still making their way into China.
Republican Rep. John Moolenaar from Michigan, who chairs the House Select Committee on China, emphasized the need for “scrutiny and verifiable guardrails” regarding AI trade. He expressed worries about a deal being reviewed between the Trump administration and Abu Dhabi’s G42, which has ties to China.
Under a new agreement, the UAE and US collaboration will see G42 establish a massive 5G data center in Abu Dhabi, anticipated to be the largest AI campus outside the US.
“The US must lead in AI technology, but it has to be tightly controlled,” Moolenaar told X.
“We raised these concerns last year regarding G42, and there need to be safeguards before more contracts are approved,” he added.
While China has strengthened its economic connections with Gulf nations, geopolitical analysts note that these ties do not compare to its relationships with US adversaries like Iran and North Korea.
“This creates more opportunities for various companies to start selling chips and components, potentially undermining US export controls,” said Alison Silwinski, vice president of Asia Group.
A White House spokesperson defended the agreement, stating it contributes to a global AI ecosystem built around American technology and supports aligning the UAE’s security regulations with those of the US.
Management, technical leaders dismiss concerns
Commerce Secretary Howard Lutnick attempted to alleviate fears over the G42 contract, stating it includes strong security measures to prevent US technology from falling into the wrong hands.
David Sachs, involved with White House crypto initiatives, pushed back against criticism, asking rhetorically if China would want these deals. He claimed Trump outpaced them.
Leaders from major tech firms support the agreement, believing it will enable private companies to gather more resources and expand internationally.
In a supportive post, OpenAI CEO Sam Altman praised Trump’s strategy, mentioning it was unfortunate that he faced criticism.
Altman, who traveled with Trump, was among those who anticipated OpenAI contributing to the development of the 5G data centers.
Nvidia CEO Jensen Huang also joined the trip, downplaying fears of chip repurposing, arguing the large systems they produce cannot be easily diverted. He emphasized that all parties must recognize that diversion will not be tolerated to continue accessing Nvidia technology.
While on the trip, Huang announced plans to sell over 18,000 of Nvidia’s AI chips to a Saudi Arabia-based company to support the data center project.
Nvidia’s stock rose significantly last week, providing some relief to chipmakers as they navigate export regulations. The company previously estimated that the Trump administration’s controls could cost it $5.5 billion.
Promote AI domination
Just days before the Middle East trip, the Commerce Department affirmed its support for loosening restrictions, overturning previous rules that limited AI chip sales to just 18 countries. Federal agencies argued these rules hindered American innovation.
Many tech firms and policy experts, including those from Nvidia and Microsoft, believe the previous rules were overly restrictive and jeopardized the US’s competitive edge globally.
“The old regulations were complicated and bureaucratic, making it difficult for agencies with limited resources to enforce them efficiently,” noted Matt Mittelstead, a researcher at the Cato Institute.
“If these rules had been implemented, China could have operated with much greater freedom than American companies,” he added.
The Bureau of Industry and Security is attempting to strike a balance by withdrawing those rules while providing updated guidance, especially considering Huawei’s close links to the Chinese government.
AI ‘bargaining’ chip
The Gulf Coast Agreement showcases how the Trump administration is leveraging AI infrastructure investments to enhance bilateral relations.
While these deals aren’t directly tied to ongoing trade negotiations, experts speculate the administration might use them as leverage for concessions in other tariff discussions.
“They could use these agreements to negotiate tariff reductions or other aspects, capitalizing on a typical strategy of leveraging deals,” suggested Sam Winter Levy from the Carnegie Endowment for International Peace.
Observers worry that essential safeguards may be overlooked as the administration prepares for tariff negotiations with various allies.
“Attempting to manage multiple countries at once could lead the government to mishandle strategic technology exports,” Winter Levy warned.
Experts caution that such policies might backfire, suggesting that companies may feel pressured to relocate to the Gulf to remain competitive, potentially moving critical technologies out of the US.
“In the long run, this could push companies toward alternatives, particularly as China seeks substitutes due to US export restrictions,” they concluded.
