Startup founders urge Trump not to shut off Chinese open weight AI

• Almost 200 companies are urging the Trump administration not to cut off access to Chinese open-weight AI models.
• The companies say cutting off access risks crippling the next generation of U.S. startups.
• The newly-formed Little Tech Association sent letters to the administration with its appeal on Wednesday.

Almost 200 Silicon Valley companies, including Proton and Y Combinator, are urging the Trump administration not to cut off access to Chinese open-weight artificial intelligence models or risk crippling the next generation of U.S. startups.

On Wednesday, the newly-formed Little Tech Association sent letters to President Donald Trump, Commerce Secretary Howard Lutnick and others in the administration with its appeal, marking the first coordinated effort by Silicon Valley’s wider influential startup community to weigh in on one of the Trump administration’s most closely watched AI debates. At issue: whether Washington should restrict access to increasingly powerful open-weight — meaning, AI models whose weights are publicly available — AI models released by Chinese companies such as Moonshot AI and Alibaba.

“American leadership requires two things: world-leading American open-weight models and continued access for U.S. builders to open models already available worldwide,” the startup founders wrote in the letter obtained by POLITICO, also sent to Office of Science and Technology Policy Director Michael Kratsios. Instead of broad prohibitions, they argue the government should adopt targeted safeguards.

And they warn that banning Americans from downloading Chinese open-weight models wouldn’t stop their proliferation — but would weaken U.S. startups.

“There’ll be hundreds of companies that instantly die,” said Suhail Doshi, founder of AI infrastructure startup Particle and a member of the association, which POLITICO first wrote about exclusively, in an interview. “It’s great for Anthropic. We’re all going to have to spend money on Anthropic.”

The matter took on new urgency following reporting that the Trump administration was considering banning Chinese AI models, shortly after Moonshot AI unveiled its powerful Kimi K3 model.

“The United States leads the world in AI innovation, and President Trump will keep it that way. The Trump Administration is doubling down on innovation to widen the gap between America and the rest of the world,” White House spokesperson Liz Huston said in a statement to West Wing Playbook.

A White House official granted anonymity to discuss the possibility of action against Chinese models said, “Any policy announcement will be announced directly by the administration. Any reporting until then is baseless speculation.”

Those reports sparked panic across Silicon Valley’s startup community, where many founders rely on the cheaper Chinese open-weight models to build products and lack the resources to spend heavily on usage credits from U.S. AI companies like Anthropic and OpenAI. Among their fears: that banning these models would heavily advantage a handful of AI behemoths.

It also sparked discussions Monday night about the matter among senior White House and Cabinet members, according to two people familiar with the matter granted anonymity to speak about private discussions. But the idea of a blanket ban on Chinese open-weight models was not seriously discussed.

Still, administration officials have continued escalating their rhetoric against Chinese AI developers.

Treasury Secretary Scott Bessent said Tuesday on Fox Business’ “Mornings with Maria” that the administration would investigate whether Chinese artificial intelligence companies had improperly distilled American models to power their own, saying that the U.S. can “sanction” companies that engage in intellectual property theft.

On Wednesday, Kratsios said the administration had information that Moonshot AI distilled Anthropic’s Fable model while developing K3, alleging the Chinese company built “a sophisticated internal platform” to conduct large-scale distillation against American models while attempting to evade detection. Kratsios also alleged that Moonshot had acquired Nvidia GB300-equipped servers to train its models, despite a ban on their sale to Chinese entities.

Kratsios emphasized that the administration “strongly supports the free and fair development of AI, including a thriving competitive ecosystem that spans frontier models, specialized systems, open-source frameworks, and open-weight models,” while drawing a distinction between legitimate model distillation and industrial-scale theft.

Moonshot has not publicly addressed the allegations.As of Wednesday, the Commerce Department — which maintains a list of companies subject to export controls and licensing restrictions, called the Entities List — had not drafted plans to include Chinese AI companies, according to the first person.

The group’s position against banning open weight models also reflects a growing divide inside the AI industry, with heavyweights like Anthropic increasingly urging more restrictions on Chinese AI developers over security concerns, and startups arguing that bans would do little to help, but would put startups at a competitive disadvantage.

Little Tech Association Executive Director Harry Godfrey said in an interview that policymakers should use “a scalpel rather than a sledgehammer.”

“The answer here would be: What is the lightest-touch way that doesn’t raise costs, limit access or inhibit American innovation while still addressing” legitimate security concerns, he said.

This story originally appeared on POLITICO and is courtesy of the Axel Springer Global Reporters Network, which harnesses the resources of the company’s newsrooms to publish ambitious scoops, investigations, interviews, opinion pieces, and analysis. It allows journalists — including those from POLITICO, Business Insider, WELT, BILD, Onet, and Fakt — to collaborate on major stories for an international audience of hundreds of millions across platforms.

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