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Treasury Secretary Bessent warns US may sanction Chinese AI models

financeJul 21, 202620815

Treasury Secretary Scott Bessent warned Tuesday that the Trump administration could impose sanctions on Chinese AI models if investigators confirm those models were built using stolen U.S. intellectual property. Bessent told Fox Business that the administration supports open-source models but not IP theft and that investigators are finding "watermarks of our U.S. large language models on many of the Chinese models." The recent release of Kimi K3 from Chinese startup Moonshot AI, which the company says matches Anthropic and OpenAI and an AI evaluator recently ranked top for front-end coding, heightened U.S. concern because Kimi is an open-weight model. Bessent pointed to distillation, a technique for transferring knowledge from larger models to smaller ones, as part of the worry about how foreign models may replicate U.S. capabilities. He said the Treasury will be looking into these issues in the coming days or weeks and raised the possibility that companies using Chinese models might have to disclose that to their customers. The administration framed sanctions as an available tool if investigations confirm theft from U.S. firms.

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