# US-China AI Trade War: Export Controls, Distillation Campaigns, and Regulatory Fragmentation

> This analysis traces how the US-China contest over AI is hardening across three fronts at once. On chips, a January 2026 US policy shift moved advanced parts like Nvidia's H200 and AMD's MI325 from near-automatic denial to case-by-case review, swapping a blanket ban for transaction-specific risk assessment while keeping national security front and center. The second front is extraction. A September advisory from the NSA, CISA, and FBI details industrial-scale distillation by six Chinese firms targeting US frontier models, which reframes the whole export-control debate: limiting hardware means less if capabilities can be siphoned through public APIs. The third front is regulation, where the EU AI Act has moved from theory into enforcement and China keeps layering rules on generative AI, deep synthesis, and facial recognition. Put together, the piece argues the world is fragmenting into divergent AI regimes rather than converging on shared norms. For companies operating globally, that means navigating conflicting compliance regimes and escalating controls at the same time. It is a useful map of why AI policy in 2026 feels less like one rulebook and more like several colliding ones.

_Section: [Interesting AI Articles](https://www.wortins.com/articles) · Source: Mayer Brown · Published Wednesday, September 9, 2026_

## Wortins' read

This analysis traces how the US-China contest over AI is hardening across three fronts at once. On chips, a January 2026 US policy shift moved advanced parts like Nvidia's H200 and AMD's MI325 from near-automatic denial to case-by-case review, swapping a blanket ban for transaction-specific risk assessment while keeping national security front and center. The second front is extraction. A September advisory from the NSA, CISA, and FBI details industrial-scale distillation by six Chinese firms targeting US frontier models, which reframes the whole export-control debate: limiting hardware means less if capabilities can be siphoned through public APIs. The third front is regulation, where the EU AI Act has moved from theory into enforcement and China keeps layering rules on generative AI, deep synthesis, and facial recognition. Put together, the piece argues the world is fragmenting into divergent AI regimes rather than converging on shared norms. For companies operating globally, that means navigating conflicting compliance regimes and escalating controls at the same time. It is a useful map of why AI policy in 2026 feels less like one rulebook and more like several colliding ones.

## Source

[Read the full story at Mayer Brown](https://www.mayerbrown.com/en/insights/publications/2026/01/administration-policies-on-advanced-ai-chips-codified)

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