President Trump’s trip to China aims to lock in American tech leadership, but our own policies are strangling that edge. Tight export controls, well intentioned or not, have closed off markets to U.S. chipmakers and handed Beijing a clear incentive to build its own industry. The result: we risk losing dominance not because China out-innovated us, but because Washington chose to handicap American firms in the name of control.
Export rules meant to protect national security have slipped into a protectionist spiral that hurts the very companies we need to win. Bureaucrats and politicians decided they know better than global customers and market forces, and that choice is narrowing opportunities for U.S. firms. When government picks winners and losers, innovation and investment suffer.
We are still ahead in chips and AI, but the margin is razor thin and closing. Years of restricting NVIDIA and AMD sales to China have not slowed Beijing much; they’ve pushed China into pouring money into domestic chip capacity, including a state-backed semiconductor fund of $47.5 billion. That kind of capital accelerates capacity even if some of it is wasted.
Government money often gets steered into politically favored projects rather than efficient ones, but the sheer scale of China’s spending will still expand their manufacturing footprint. Huawei and other domestic players are ready to ship their Ascend AI chips into any gap we open with our restrictions. Meanwhile, American companies sit tangled in red tape and shifting rules about what is considered “restricted technology.”
I call the policy fallout the Doomer Tax: by cutting off big foreign markets, U.S. chipmakers lose about $50 billion in annual sales. At roughly 70% margins, that equates to $35 billion in foregone profits and about $7.5 billion less in corporate tax revenue for the Treasury each year. Less profit means less reinvestment into the next-generation chips that keep America competitive.
Imagine an airline lobbying to ban Boeing from selling planes overseas because it fears competition — it would sound absurd. Yet a handful of AI firms, led by Anthropic, are pressuring Washington to stop other companies from accessing American chips to blunt foreign competition. If a private firm wants to block sales of technology it owns, that’s one thing; when the government makes that the rule, it becomes a strategic mistake.
Legislation like the MATCH Act and the GAIN Act, backed by members of Congress, risks turning policy into a chokehold on U.S. competitiveness rather than a shield for security. These bills overlook a basic truth about innovation: R and D needs capital, and capital follows markets. To recover the roughly $700 billion flowing into next-generation chip investment, American firms must be able to sell into the biggest markets on the planet.
There’s a reason eight of the top ten most profitable tech companies are American: we operate through markets, not central planning. That market-driven model produced the Internet-era giants and the superior chip technologies we lead with today. Competitors that rely heavily on state direction simply don’t match the agility of market-based innovation over the long run.
Turning our hardware into a tool of geopolitics tells the world our technology might not be a reliable supply chain partner anymore. That’s a dangerous signal; customers will naturally look for alternatives if U.S. products become harder to buy. Export controls, as currently applied, act like a self-imposed tariff that encourages buyers to switch suppliers rather than stay loyal to American-made tech.
National security sometimes demands tight limits, and sensible controls should always be on the table. But sweeping policies that close markets and punish American firms do more to help Beijing than to protect us. Keep the exceptions narrow, protect vital systems, and let the market reward the companies that keep investing in next-generation innovation. TRUMP’S GREEN LIGHT FOR NVIDIA SALES TO CHINA SPARKS ALARM ON CAPITOL HILL KEVIN O’LEARY WARNS CHINA ‘KICKING OUR HEINIES’ IN AI RACE AS REGULATORY ROADBLOCKS STALL US AMERICA MUST WIN THE AI RACE — AND PREPARE FOR THE WORST
