DeepSeek avoids US blacklist as Washington cracks down on more than 100 Chinese firms

The US has reportedly postponed adding China’s AI startup DeepSeek and more than 100 other companies classified as national security risks to the trade blacklist, signaling a major shot as the Trump administration struggles to reduce rising tensions with Beijing.

This marks the first time it is being reported that DeepSeek and other companies were officially approved for the blacklist by an interagency committee last year.

The low-cost AI model, DeepSeek, heavily impacts China's military and intelligence operations, according to a senior US State Department official. He alleged that the startup attempted to employ Southeast Asian shell companies to illegally obtain advanced US chips.

According to Anthropic, it has identified a campaign by DeepSeek and two other prominent Chinese AI labs to illicitly extract capabilities from its AI platform to improve their own models. 

Meanwhile, OpenAI also cautioned legislators that DeepSeek was distilling its modest “free ride” on American technology.

The United States and China are engaged in a cut-throat competition over technology, trade and national security, with Washington using tariffs and export controls to keep Beijing cornered while China maintains a restrictive control over the supply chain that supplies defense auto, and chipmaking firms.

A former Commerce Department official, Kevin Kurland said: “The fact 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.”

Several Chinese companies were slated for the blacklist for supplying components used in Russian drones recovered in Poland. Subsequently, other Chinese companies were identified as national security risks for selling restricted Nvidia chips to Chinese universities.

Undersecretary of commerce for industry and security, Jeffrey Kessler has struggled continuously to avoid blacklisting Chinese entities for fear of escalating tensions between the US and China. 

Debates persist over whether to include an entity on the trade list-a process managed by a company that includes officials from the departments of Commerce, Defense Energy, State and sometimes Treasury.

Although the interagency committee has approved adding the entities to the blacklist, the Commerce Department has yet to officially publish them. 

It is pertinent to mention here that at least 75 Chinese entities involved in semiconductor production, chipmaking equipment, and AI modeling have passed through a procedural review and were slated for blacklisting by authority.