Under Trump, The Agency At The Center Of The Global Ai Tech Race Has Slowed To A Crawl

China hawks in Washington are raising alarms that the Trump administration agency tasked with slowing China’s access to advanced U.S. technology is failing at its job.

Beijing may have mistakenly accessed thousands of high-end U.S. computer chips due to an oversight by the Trump administration in May of last year. The government hasn't updated its blacklist of foreign firms barred from receiving American technology in months. Export license applications are piling up without approvals. And rulemaking by the agency is at its slowest pace in two decades, a POLITICO analysis of federal register rule notices found.

The Commerce Department's Bureau of Industry and Security is supposed to be at the forefront of America’s AI race with China, creating and enforcing restrictions on advanced semiconductors and other building blocks for artificial intelligence models that are sold abroad. But POLITICO spoke with half a dozen former BIS officials, including four from the Trump administration and two career officials, and another half a dozen people close to the White House who said delays in decisionmaking are grinding core parts of the agency to a halt. The 12 people were granted anonymity to speak candidly about the bureau’s operations.

The former officials and those China hawks in the White House’s orbit pin the blame on bureau chief Jeffrey Kessler and his boss, Commerce Secretary Howard Lutnick, who they say are mismanaging the agency of more than 400 hundred people. But the lack of action is also a reflection of broader disagreement within the Trump administration over how tough a line to take with Beijing on high-tech exports, as the president pursues ambitious economic negotiations with Chinese leader Xi Jinping.

“There's no coherent plan or objective standards, and I think this is what we get downstream from that,” said Stephen Ezell, vice president of global innovation policy at the Information Technology and Innovation Foundation, a Washington-based tech policy think tank.

BIS called claims of a slowdown a “false narrative” in a statement to POLITICO although it added that “under this administration, BIS no longer rubber-stamps license applications involving these technologies.”

The agency said that average processing time for license applications was 62 days last year, which is slower than previous administrations.

The Commerce Department did not respond to multiple requests for comment, nor did the department or BIS make Kessler or Lutnick available for comment.

In a statement to POLITICO, White House spokesperson Kush Desai defended the agency and its leadership, but did not directly address the slowdown of the agency’s core functions. “Anonymous griping from disgruntled and incompetent former officials only reinforces that Under Secretary Kessler is restoring competence in BIS decision-making and remains a key asset for President Trump and Secretary Lutnick,” he said.

Critics, however, say the agency is increasingly in a state of policy paralysis. As rules stall, licenses pile up and foreign companies that could pose national security risks duck the Commerce Department’s blacklist, sensitive technology has more room to flow to China and other adversaries — frustrating China hawks in both parties who say BIS is failing to help cement Washington’s lead in the AI tech race. In the absence of action from the bureau, both Republican and Democratic lawmakers have recently introduced bills aimed at tightening U.S. AI chip export controls and closing perceived loopholes.

The former BIS officials and people close to the administration say Kessler’s micromanaging at the bureau is a central part of the immediate problem — stalling decisions on export licenses for companies seeking to sell their tech products abroad and on adding foreign companies to the agency’s export blacklist.

A trade lawyer by training, Kessler’s expertise lies in legal disputes over whether foreign companies unfairly undercut U.S. industries with the help of their governments. He served as the Commerce Department’s top trade enforcement official in Trump’s first term, where he gained a reputation as a dedicated China hawk, but he had not previously focused on export control policies.

"He's a tariff lawyer, so he doesn't really understand any of this," one of the former senior BIS officials said in an interview. "There's a lot of grumbling that everything has to go through Jeffrey Kessler, and he just doesn't know how to manage the agency."

In his statement, White House spokesperson Desai also hit back at the former officials who spoke with POLITICO and defended the departures. “Incompetent leadership at BIS in previous administrations eroded America’s manufacturing sector and lead in cutting-edge technologies, an unacceptable status quo for the Trump administration.”

BIS also signaled the agency has placed greater emphasis on export enforcement efforts, noting that the agency imposed about $324 million in penalties last year, up from $16 million in 2024. “Export controls are only effective if they are enforced. Under the Trump Administration, this is finally happening,” said BIS.

Kessler has a key ally in Lutnick, who has shown far more interest in headline-grabbing investment deals than in the complex legalese of export controls.

"I expected him to be fired yesterday," said a second former BIS official of Kessler, who served under the Trump administration and has kept close tabs on the agency. "The only reason he's still there is because of Lutnick."

For Lutnick, Kessler has remained a trusted lieutenant despite mounting criticism of the bureau. The two share a broad vision for the bureau — muscular enforcement against adversaries like China — but Lutnick has so far failed to reckon with how badly Kessler has undermined that goal in practice, said two of the people.

The latest episode that’s shaken the trust of China hawks in and out of the administration: a revelation that, for the last year, the U.S. government may have inadvertently been letting American tech companies sell advanced computer chips to Chinese subsidiaries with government approval.

That’s because the Commerce Department announced in May 2025 that it would not enforce the complex, “overly bureaucratic” measure issued by their predecessors in the Biden administration curbing foreign sales of certain advanced chips — including rules barring the chips from going to overseas subsidiaries of Chinese companies. But the White House and Commerce Department still have yet to issue a replacement rule, triggering confusion over what rules remained in force.

BIS in its statement said it has no plans to revive the Biden-era rule, noting “it would have crippled the global AI industry.”

"However, BIS has adopted other policies to protect American AI technology," BIS said, pointing to industry guidance and policy statements as well as rules governing the potential sale of H200s to China, another high-end chip. China has not yet purchased any from the U.S.

On Sunday, May 31, BIS issued guidance clarifying that those sales require licenses — an implicit acknowledgment that the agency had left the gap unaddressed.

China has not confirmed they acquired any of the restricted chips as a result. But two former BIS officials who spoke to POLITICO said that thousands may have flowed to China before the guidance was revised, including advanced AI processors like Nvidia’s Blackwells, which China hardliners have long warned could be diverted to fuel the country’s military. Nvidia said in a response to a request for comment that the new guidance did not change anything for the company, because Commerce had already clearly imposed rules curbing those sales.

The Chinese Embassy did not respond to a question about the guidance.

“China’s position regarding U.S. chip exports to China has been consistent: we advocate that China and the United States achieve mutual benefit and win-win outcomes through cooperation, and we oppose the politicization, instrumentalization, and weaponization of technological and economic issues,” the embassy said

“This was a massive screwup,” said a third former official with the agency, who also served under the Trump administration. “It all stems from one person's incompetence.”

Until recently, the U.S. government used export controls narrowly — to restrict specific military-related technologies from being shipped to adversaries. But over the last decade, administrations have seized on them as a tool in the broader economic rivalry with China.

In his first term, Trump blacklisted the telecom giant Huawei and attempted to block it from advanced computer chips made anywhere in the world using U.S. technology. Biden expanded on that approach, imposing sweeping restrictions across multiple countries on advanced chips and chipmaking equipment bound for China and other countries considered a national security risk.

As the agency responsible for designing and enforcing export controls, BIS has been at the forefront of that effort, determining what technology requires a government license before it can be sold abroad. It's also tasked with maintaining a list of blacklisted companies that face restrictions on obtaining U.S. tech.

But despite the dramatic rise in its workload in recent years, the bureau has not seen similar boosts to its funding or staffing. Adding to the challenges, BIS has seen an exodus of career staff, including China experts that's quickened since the start of the second Trump administration.

Kessler took over as the head of the bureau in March 2025. According to two former officials familiar with his selection, the administration tapped him because of his bona fides on trade and hawkish past positions on China, as well as his fierce loyalty to the administration and to the Commerce secretary.

In the months since, BIS has published the fewest rules of any year in more than two decades. Critics also complain that the government's blacklist of foreign firms barred from receiving American technology has not been updated in months and export license applications have piled up for so long that American companies have lost business waiting for approvals.

A Center for Strategic and International Studies report released last week found that the eight-month stretch since BIS last added to its blacklist, known as the “Entity List,” is the longest such period since 2008. From 2018 to 2024, according to CSIS, BIS made additions every 35 days on average. But since October, it has made none.

In its statement, BIS defended its pace of new additions, noting that "it is normal to have a robust interagency process around potential additions to the Entity List.”

The primary reason the agency has ground to a halt, the former officials and China hawks say, is Kessler’s mandate that he personally review nearly all the applications companies submit for licenses they need to export certain technology abroad, a function traditionally performed by career officials at the agency, said three of the former agency officials familiar with the pivot, two of whom worked under Kessler. Part of the problem is that Kessler and top aides have not been consistently holding meetings to review those applications, and when they have, they have often left out the technical experts needed to resolve key questions.

"Kessler has made it his mission to review every single license [application] that is being processed through BIS," said the second former BIS official, referring to requests from companies to export technology, which effectively remain frozen pending his sign-off. "This man is sitting on billions of dollars of U.S. exports and not doing anything.”

BIS denied that every license application requires Kessler’s personal review. “This would be an impossible task” because of the sheer number of applications received, the agency said.

According to a survey from the Semiconductor Industry Association, its members waited an average of 76 days for export license applications for low-risk countries to be processed over much of 2025. That's double the 38-day overall average processing time BIS reported in fiscal year 2023.

BIS suggested that the slower pace of approvals should not be read as a less active agency, saying that BIS in 2025 “ended the Biden Administration’s pernicious practice of rubber-stamping license applications to entity listed companies.”

“Under Biden, BIS approved thousands of such licenses – most often, the parties involved were SMIC and Huawei,” BIS said. By contrast, the agency since its second quarter of 2025 has issued “only about a dozen, for very specialized situations such as wind-downs in sanctioned countries,” and it has issued no new export licenses for SMIC and Huawei, they said.

Kessler has also blocked BIS from adding more than a hundred foreign companies flagged as potential national security risks to its trade blacklist, which cuts listed firms off from U.S. technology without a special license, according to three former officials. They say Kessler is wary of rankling China after the bureau’s expansion of the list last year prompted Beijing to retaliate with sweeping rare-earth export restrictions. But that is a reflection of the White House’s current approach to China, as well, with administration officials taking pains not to create flashpoints since the president reached a trade detente with China's Xi last fall.

"Analysts at BIS have stopped even bothering to do the work of identifying them," said one person. "Because why bother?"

Adding to the bottleneck, Kessler often seeks approval from Lutnick for decisions on licensing, blacklist additions and even routine staff calls with foreign government counterparts, according to four of the former BIS officials who spoke to POLITICO.

“Lutnick doesn't interact with civil servants, at least at BIS. He refused to ever meet with us,” said the second former official. “So there was this weird game of telephone that was going on” — staff would brief Kessler, who then relayed information to Lutnick, with no guarantee anything survived the translation.

The frustration is shared by Trump administration officials in and outside the agency, according to six of the people, including one that left the agency during the Trump administration’s second term.

BIS Deputy Under Secretary Joe Bartlett, the bureau's second-highest official, overseeing the regulation of tech exports is leaving the agency and according to two former agency officials and two people close to the administration familiar with his plans, it’s borne out of frustration with the direction Kessler and Lutnick have taken the bureau.

Bartlett recently wrapped up paternity leave at BIS and is taking a job at the law firm Greenberg Traurig, according to another person with direct knowledge of his plans. "The lack of positions that Jeff and Lutnick were taking was devastating to him. He came in ready to do this thing. He was really not happy," said one of the former agency officials. Bartlett declined to comment.

Even Kessler’s critics, however, acknowledge the bureau faces enormous challenges, regardless of its leadership. A 2022 report from CSIS warned the agency's tech systems are in a "dreadful state," and a report from Senate Democrats released shortly before Trump took office described the bureau's enforcement capacity as "a shadow of what it should be."

Earlier this year, the Trump administration asked Congress for a $215 million increase for the bureau, arguing it needed additional personnel to enforce export controls and oversee the tech trade. The House Appropriations Committee approved the full increase in its fiscal 2027 spending bill in May, though the measure still needs to clear the full House and Senate before becoming law.

"I think the consensus would be that [Kessler has] got a lot of constraints, he's got a White House that makes up its own ideas, he's got Lutnick to deal with,” one of the former BIS officials said. “But he's also self-defeating."

Daniel Desrochers contributed to this report.