On Tuesday, Treasury Secretary Scott Bessent said the U.S. would examine open source models from China for signs of intellectual property theft, threatening sanctions against Chinese AI companies if IP theft is established.

U.S. Treasury Secretary Scott Bessent announced on Tuesday that the United States will scrutinize open‑source artificial‑intelligence models originating from China for evidence of intellectual‑property theft, warning that sanctions could be imposed on Chinese AI firms if violations are confirmed.

Policy Shift Signals Tougher Stance on AI Trade

The statement marks a notable escalation in Washington’s approach to the burgeoning AI rivalry with Beijing, expanding the scope of existing export‑control measures to include software and data that may be used to replicate proprietary technologies.

Bessent emphasized that the review will focus on whether Chinese developers are leveraging U.S.‑originated code, research papers, or model weights without proper licensing, a practice that could undermine the competitive advantage of American innovators.

Potential Targets and Enforcement Mechanisms

The Treasury Department indicated that any entity found to be complicit could face penalties similar to those applied under the Export Administration Regulations, including asset freezes, denial of U.S. market access, and restrictions on financial transactions.

  • Chinese AI startups that incorporate unlicensed U.S. code
  • Established firms that distribute open‑source models derived from proprietary American research
  • Third‑party platforms hosting potentially infringing models

Industry Reaction

Chinese tech companies have responded cautiously, asserting that their models are built on publicly available data and that they respect international IP norms. Analysts warn that the policy could spur a fragmentation of the global AI ecosystem, prompting firms to develop parallel, isolated model repositories.

U.S. industry groups welcomed the move, arguing that stronger enforcement is needed to protect billions of dollars in AI research investments and to ensure a level playing field for American developers.

"We cannot allow systematic theft of our intellectual property to go unchecked," Bessent said during a press briefing.

The Treasury’s initiative follows earlier actions targeting semiconductor supply chains and will likely involve coordination with the Commerce Department and the Department of Justice to build a comprehensive enforcement framework.

TechCrunch coverage of U.S. sanctions threat against Chinese AI models