DeepSeek Finds US Export Controls at a New ‘Sputnik Moment’

“DeepSeek-R1 is AI’s Sputnik moment,” Marc Andreessen posted on social media this week, referring to the Chinese artificial intelligence chatbot that has stunned the world with its effectiveness and low cost.

The advent of AI, the great-power competition between the US and China, and the trigger event of DeepSeek’s rise have created even higher stakes than the 20th century space race, where the Soviet Union’s launch of the Sputnik satellite galvanized the US to prioritize its space program. The ongoing conflict is over AI’s ceiling—the “compute” (computational power) necessary to deploy models broadly, as noted by the Center for a New American Security’s Janet Egan.

US export controls over the compute chokepoints are at the center of this fight, rather than domestic regulation of AI or US regulation of the models themselves. AI can’t exist in the ether; its temporal existence relies on physical infrastructure. Chips, data centers, and vast amounts of electrical power are critical: Frontier AI models can’t be developed without them.

Some have questioned whether DeepSeek’s apparent progress demonstrates that US export controls are ineffective and should accordingly be abandoned.

But as the initial reaction has come back to earth, the latest reporting and policymakers’ public remarks suggest that companies should expect US policymakers instead to expand export controls and enforce existing controls more vigorously—and to backstop those controls with tariffs. In this sense, DeepSeek’s practical impact on US export controls will actually be to reinforce their centrality to the US’ ability to stay competitive in the AI race.

For example, rumors have circulated that advanced AI chips were diverted to DeepSeek and other Chinese AI labs at a scale far beyond what one would expect. And DeepSeek’s own founder, in a meeting with the Chinese premier this month, reportedly said US restrictions on the export of advanced chips to China were still a bottleneck. This is consistent with today’s fight being over AI’s ceiling.

Additionally, a staff report out of the US Senate last month called for more aggressive export control enforcement, stating that “Export controls are now looked at as a key tool to halt the advance of adversaries at war. They are also increasingly relied upon to maintain U.S. strategic technological dominance.”

To increase enforcement, the report called for more funding for the US Bureau of Industry and Security so it can more effectively fulfill its national security mission. Even more critically, it also recommended that the agency “use the full scope of its authority to ensure compliance with U.S. export control laws,” focusing in particular on leveraging the “high probability” standard of awareness that has previously driven US Foreign Corrupt Practices Act enforcement. The report concluded, “Absent these improvements, the U.S. export control regime will remain in its current state: strong on paper, weak in practice.”

US national security objectives aren’t served if other countries see US export controls as a paper tiger. Yet that is the impression created by news headlines such as one on Jan. 28: “How China’s DeepSeek Outsmarted America.”

The America First trade policy takes aim at this (mis-)impression and addresses “how to maintain, obtain, and enhance our Nation’s technological edge and how to identify and eliminate loopholes in existing export controls.” DeepSeek’s stunning progress will feature prominently in this effort, as President Donald Trump has already said that it is a wake-up call for US industries, and that they “need to be laser-focused on competing to win.”

Commerce Secretary nominee Howard Lutnick echoed those remarks during his confirmation hearing this week in addressing DeepSeek’s reported use of US intellectual property and US-designed chips to develop its models: “I am going to be rigorous in our pursuit of restrictions and enforcing those restrictions to keep us in the lead because we must stay in the lead.”

Falling behind in the space race with the Soviet Union spurred the US’ refocused efforts and determination that catapulted it to the moon. As the new administration sees it, the current AI competition will determine who dominates in the 21st century.

Expect the Trump administration’s reliance on export controls—and all the levers at the Commerce Department’s disposal to enforce them—to be a key tool in what it views as an existential competition to lead the AI future.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Brent Carlson is director at Berkeley Research Group and a certified fraud examiner.

Michael H. Huneke is co-chair of the sanctions, export controls, and anti-money laundering practice group and partner in the global investigations, enforcement, and compliance practice group at Hughes Hubbard & Reed.

Write for Us: Author Guidelines