US Treasury Secretary Bessent Warns of Sanctions on Chinese AI Models

U.S. Treasury Secretary Scott Bessent told Fox Business that the Treasury has the authority to sanction Chinese artificial‑intelligence companies if they are found to be stealing intellectual property from U.S. firms. He referred to the practice of “model distillation,” where smaller foreign models are trained on the outputs of large U.S. frontier models, and said any evidence of such IP theft would trigger sanctions.

The warning comes as Chinese open‑source models such as Moonshot AI’s Kimi K3 and DeepSeek’s recent releases match or exceed the performance of leading U.S. systems from OpenAI and Anthropic, raising concerns in Washington. Earlier this year the Trump administration imposed export bans on advanced AI chips to China; Bessent’s comments suggest a possible extension of that pressure to the software layer. The issue is also slated for discussion in upcoming U.S.–China AI talks planned for September 2026, where export‑control rules and frontier‑model risks will be on the agenda.

If the Treasury proceeds, the sanctions could affect Chinese AI labs and their collaborators, further intensifying the broader U.S.–China competition for leadership in artificial intelligence.