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Add The New York Post on Google The Trump administration could sanction Chinese artificial intelligence firms if it uncovers evidence that their open-source AI models were built by ripping off US labs, Treasury Secretary Scott Bessent warned Tuesday.
“This administration supports open-source models, but what we do not support is IP theft,” he said during an appearance on Fox Business. “If we see, especially, that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft.”
As The Post has reported, AI giants like Anthropic, OpenAI and Google have each raised alarms about China-based labs using unauthorized distillation – a technique in which a more advanced model is used to train a new one without permission.
Those concerns have accelerated as powerful open-source AI models such as Moonshot’s Kimi K3 gain popularity in the US while charging a fraction of the cost for those offered by Anthropic and OpenAI.
Bessent said that US officials have found the “watermarks” of US-made AI models within Chinese models – a trend that he called “unacceptable.”
“We’re going to be looking at that in the coming days or weeks,” he said.
Anthropic directly accused Moonshot of using distillation in February, though it has yet to say if there is any evidence that Kimi K3 was distilled.
The Treasury secretary, who will be leading high-level US-China talks on artificial intelligence in September, also raised the possibility that US firms that make use of Chinese models could be required to make public disclosures.
Bessent’s remarks came as top US officials debate the best way to respond to China’s rapid advancements in AI.
The conventional wisdom that US labs have a six-to-12-month lead on China has come into question given the recent success of Moonshot and another firm called Z.ai, which released an open-source model called GLM-5.2 earlier this month.
Earlier this week, Axios reported that the Trump administration was examining potential ways to crack down on Chinese models, such as potentially adding Chinese labs to the Commerce Department’s “entity list” – meaning they could not operate in the US without a license.
Dean Ball, OpenAI’s head of strategic futures and a former Trump AI official, ruffled some feathers on social media by declaring that the success of open-source AI models could result in what he called “full AI communism, which is precisely what China proposes.”
Critics of such assertions warn that undue regulation could stifle fair competition in the AI world.
White House AI adviser David Sacks fired back at OpenAI’s Ball in a lengthy X post, suggesting that he was confessing to a “regulatory capture strategy” meant to shape laws to his company’s benefit.
Sacks added that the US was “at a critical inflection point in AI policy.”
“The leading closed labs, already a duopoly in terms of AI model revenue, want the government to eliminate their open source competition,” he wrote. “They have laid their cards on the table. It is time for the rest of Silicon Valley — the vast majority that still values open competition — to do the same.”