Trump's Tracking of AI Chip Shipments Exposes Flaws in His Export Control

President Donald Trump has sought to get an edge on China’s tech market by not only blocking American firms from selling artificial intelligence (AI) chips to China, but also tracking these companies’ shipments to ensure compliance.  

“U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic,” reports Reuters.

While the government’s tracking efforts only apply to “select shipments under investigation,” Reuters was unable to determine the extent of this practice or the agencies involved. However, the outlet identified the Commerce Department’s Bureau of Industry and Security, which oversees export controls and enforcement, as well as Homeland Security Investigations and the FBI, as potential partners.

Those agencies did not respond to Reason‘s request for comment.

When asked by Reuters about the potential for the government to track their products, Super Micro, an IT company that produces specialized hardware, and chip manufacturer Advanced Micro Devices (AMD) both declined to comment. Dell stated it was unaware of U.S. government trackers in its shipments, and Nvidia refuted any part in the tracking operation in a statement to Tom’s Hardware: “We don’t install secret tracking devices in our products.” 

Export controls on the sale of advanced chips to China have been in place since 2022, when the Biden administration imposed restrictions on these chip sales to China. President Joe Biden further tightened regulations in 2024 to hinder China’s production of high-tech computer chips. In April, the Trump administration allowed these rules to take effect, creating “a global licensing regime for closed AI models and the advanced chips used to train and run them,” writes Reason‘s Jack Nicastro. 

Congress has also attempted to get involved. In May, Sen. Tom Cotton (R–Ark.) introduced the Chip Security Act, which would require geotracking on high-performance hardware and grant the commerce secretary the authority to verify the location of such hardware and impose mandatory controls. 

Tracking AI chip shipments by private companies would require a warrant or, in the absence of that, the company’s consent. With a warrant, the government​​ can install tracking devices without the company’s knowledge. The Supreme Court’s unanimous decision in U.S. v. Jones (2012) established that warrantless tracking of a suspect using a GPS device violates the Fourth Amendment’s protections against unreasonable search and seizure. 

However, despite support from both the Biden and Trump administrations, export controls have largely failed to meet their desired policy goal of slowing China’s growth in AI, with recent reports by The New York Times and Reuters revealing a growing black market in China for advanced chips. 

These protectionist measures have also prompted the Chinese to pursue self-sufficiency, doing little to curb the growth of the Chinese AI sector. DeepSeek, a Chinese AI company, released a new AI model in January that utilized less advanced chips, making it more cost-effective to produce while still yielding comparable results to OpenAI’s ChatGPT. 

Some companies have been given an exception to export restrictions. On Monday, the Trump administration granted Nvidia and AMD export licenses for the sale of certain chips to China in exchange for 15 percent of the revenue generated by these sales. 

In tracking chip shipments, even Trump seems to recognize the limitations and failures of an export control regime.

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