DeepSeek escapes US blacklist as Trump prioritizes China trade truce

The Trump administration reportedly decided against adding Chinese AI startup company DeepSeek, memory chipmaker ChangXin Memory Technologies (CXMT), and 100 other companies to the US Commerce Department’s Entity List that flags companies posing a threat to national security. This decision is based on diplomatic considerations as trade talks with Beijing are already complicated by tariffs and export controls.

Indeed, there is an obvious rationale for Washington’s restraint. The United States and China remain locked in parallel disputes concerning access to technologies, rare earth metals, and tariffs. Adding more than 100 Chinese businesses to the list of companies whose exports from the United States will be prohibited in one swoop could lead to the collapse of the fragile framework both sides have maintained since their trade truce, and could invite retaliation against American companies operating in China.

An ever-growing queue of approved listings

The Entity List, maintained by the Commerce Department’s Bureau of Industry and Security (BIS), has not been updated since October 2025. Philip Luck, who tracks global supply chains at the Center for Strategic and International Studies, called it the longest gap between postings in over a decade.

According to reports, an interagency committee that includes officials from Commerce, Defense, Energy, State, and sometimes Treasury approved the DeepSeek and CXMT listings last year. But the US Department of Commerce has not published them.

Kevin Kurland, a former Commerce Department official, framed the inaction as a trade-off. “The fact that the U.S. hasn’t put any companies on the Entity List since October demonstrates that trade policy is overshadowing the use of a critical national security tool,” he said.

Jeffrey Kessler, Undersecretary of Commerce for Industry and Security, has since late 2025 sought to avoid listing Chinese parties to prevent further escalation between Washington and Beijing, according to people familiar with the matter.

DeepSeek: from AI disruptor to security concern

DeepSeek, based in Hangzhou, rattled global markets in January 2025 when it released AI reasoning models that appeared to match top American offerings at a fraction of the cost. The startup’s rapid rise prompted scrutiny from multiple corners of the U.S. government.

A senior State Department official told Reuters last year that DeepSeek had supported China’s military and intelligence operations and tried to use shell companies in Southeast Asia to illegally access advanced U.S. semiconductors. The company is referenced more than 150 times in procurement records tied to China’s People’s Liberation Army and affiliated defense entities, according to the official.

In February 2026, a separate Trump administration official said DeepSeek’s latest model was trained on Nvidia‘s most advanced Blackwell chip, potentially violating U.S. export controls that bar shipments of the processor to China. The U.S. believes DeepSeek would strip technical indicators revealing the use of American hardware, the official added.

Anthropic said this year it identified a campaign by DeepSeek and two other Chinese AI labs to extract capabilities from its Claude platform to improve their own models. OpenAI warned lawmakers that DeepSeek was similarly targeting its systems.

CXMT and the broader list

CXMT, China’s leading memory chipmaker, was designated a Chinese military company by the Defense Department under the Biden administration. The Commerce Department had considered placing it on the Entity List more than a year ago.

The unpublished queue extends well beyond these two names. At least 75 Chinese entities in advanced semiconductor production, chip manufacturing equipment, and AI modeling were approved for blacklisting through the interagency process, one of Reuters’ sources said. Dozens of other Chinese firms were identified last year for selling restricted Nvidia chips to Chinese universities, but never added to the list.

Multiple Chinese companies slated for listing had supplied components found in Russian drones recovered in Poland last September. Companies producing drones and robot dogs for China’s military were also flagged as potential targets.

The costs of delay

Some critics say that the delay makes America’s technology vulnerable to diversion. Firms on the Entity List cannot be supplied with any product from America without obtaining a license, which will most likely not be granted. This means that without the restriction in place, U.S. firms might be supplying products to entities linked to the adversarial country’s military operations without realizing this.

Moreover, BIS has still not updated the Biden-era rule on foreign access to AI chips developed with American technology, nor has it started to enforce the previous one. Such a delay can create an opportunity through which processors could have been exported to companies based outside China.

The BIS said in one of its press releases on the addition and revision of entities on the Entity List, “We will not hesitate to use the tools at our disposal… to ensure U.S. technology is not used contrary to our values.”

Thus far, it seems like the administration has made a calculation that maintaining diplomatic options with Beijing is more important than extending the blacklisting list, a wager that grows riskier with each month the backlog remains unpublished.

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