Congress faces risks of undermining AI leadership with new export bills

The FY2027 NDAA and AI

As the U.S. prepares for the fiscal year 2027 National Defense Authorization Act (NDAA), lawmakers are debating how to handle China's growing technological ambitions. While there is rare bipartisan agreement on the need to protect sensitive capabilities, the specific methods proposed are under scrutiny. The goal is to ensure the United States remains the primary provider of the technology the world relies on.

The current debate centers on whether the government should focus solely on denying China access to specific products. Analysts suggest that true national security depends on preserving American industrial strength and maintaining international relationships. The challenge lies in distinguishing between dangerous technology transfers and legitimate commerce that supports American companies.

If Washington fails to balance these priorities, it risks creating a situation where American technology is less attractive to global partners. The objective should be to protect sensitive military end users without dismantling the commercial networks that sustain U.S. leadership. Lawmakers must decide if new restrictions will actually strengthen America's competitive position or merely create new obstacles.

Risks of legislative oversight

The AI OVERWATCH Act is one of the primary measures currently under consideration. This proposal would grant Congress a direct role in export decisions by establishing a 30-day review period for certain AI chip transactions. During this window, lawmakers could block a sale through a joint resolution, moving oversight into the political sphere.

Critics argue that export decisions require high-level technical expertise and intelligence assessments that are best handled by the executive branch. Introducing a layer of congressional politics into licensing could make American suppliers appear less reliable to international buyers. Customers who invest billions in infrastructure need certainty that their equipment will arrive on time and as promised.

When suppliers become unpredictable, international customers may begin to seek out alternatives from other countries. This shift could benefit America's competitors who are ready to accommodate those looking for stability. The strategic goal is to keep the world invested in American hardware, software, and technical standards rather than losing them to competing ecosystems.

Technical and diplomatic hurdles

The Chip Security Act introduces a different set of concerns by proposing technological mandates for location verification. The Semiconductor Industry Association has warned that these security mechanisms remain untested and could be impractical on a global scale. Research has already identified significant technical limitations, including the possibility that these verification methods could be evaded.

Furthermore, implementing new authentication functions requires extensive cybersecurity testing to ensure they do not create new vulnerabilities. Engineering realities should dictate compliance timelines rather than legislative impatience. If these systems are not reliable, they could undermine the very security they are intended to provide for the American tech sector.

The MATCH Act presents a diplomatic challenge by potentially reaching across international borders. The Netherlands has formally objected to the bill, warning that its provisions could damage domestic companies and interfere with maintenance for existing equipment. Dutch Trade Minister Sjoerd Sjoerdsma warned that such an approach risks turning cooperation among allies into coercion.

Impact on global supply chains

Japan has also reportedly raised concerns about the MATCH Act, despite being a critical partner in the Indo-Pacific. Because the Japanese semiconductor industry is indispensable to the global supply chain, their objections carry significant weight. Washington faces the difficult task of listening to these partners while still attempting to enforce necessary trade restrictions.

The economic consequences of these bills could extend beyond simple diplomatic friction. The Center for Strategic and International Studies warned that the MATCH Act could disrupt the global memory chip supply chain. Such a disruption could actually slow down the deployment of American AI systems, hindering the nation's own technological progress.

While the U.S. seeks to limit China's progress, the current restrictions have already created incentives for Chinese firms to develop their own alternatives. Huawei recently unveiled a next-generation AI chip roadmap, and DeepSeek announced new software tools. These moves suggest that poorly designed restrictions may inadvertently help China close the technological gap by forcing them to build independent systems.

The path forward for leadership

To maintain a lead in artificial intelligence, the U.S. needs a coherent strategy rather than a collection of uncoordinated mandates. Experts suggest that Washington should focus on targeting military end users and illicit procurement networks. This approach allows for the protection of sensitive tech while keeping the broader commercial market open and functional.

The government should also prioritize negotiating practical export controls with allies and rigorously testing new verification technologies. By ensuring that the rest of the world still wants to use American technology, the U.S. can maintain its influence. The goal of defense legislation should be to make it harder for China to catch up, not harder for American companies to succeed.

Winning the AI race requires more than just saying 'no' to certain transactions. It requires a strategy that preserves the industrial strength of the United States and its most important global partners. If the U.S. creates too many obstacles for its allies, it may find itself leading a shrinking technological sphere.