AI Policy Weekly #71
Tariffs, Musk v. Altman, Stop Stealing Chips
Welcome to AI Policy Weekly, a newsletter from the Center for AI Policy (CAIP). Each issue explores three important developments in AI, curated specifically for U.S. AI policy professionals.
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Liberation Day Tariffs Save Semiconductors for Later
“My fellow Americans, this is Liberation Day,” began President Trump during his speech in the White House Rose Garden on April 2nd.
In a corresponding executive order, the President declared a national emergency and issued a 10% tariff on nearly all imports coming into the United States. This 10% universal tariff took effect April 5th.
The executive order also issued country-specific tariffs that bumped tariff rates for dozens of countries starting on April 9th, such as a 15% tariff on Venezuela, a 31% tariff on Switzerland, and a 47% tariff on Madagascar.
However, the President signed a separate executive order on April 9th pausing the elevated country-specific tariffs—except for tariffs on China—for 90 days.
The April 2nd executive order sought to explicitly exclude microchips, stating that “other products enumerated in Annex II to this order, including [...] semiconductors” are exempt from Liberation Day tariffs.
Specifically, Annex II listed relevant Harmonized Tariff Schedule of the United States (HTSUS) codes, such as:
8541.21.00 (transistors, other than photosensitive transistors: with a dissipation rate of less than one watt)
8542.31.00 (electronic integrated circuits: processors and controllers)
8542.32.00 (electronic integrated circuits: memories)
Semiconductor industry analysts at SemiAnalysis studied these exemptions carefully, concluding that “although semiconductor dies and integrated circuits will not be subject to the higher import duties [...] the list of exemptions does not include GPUs and a range of chipmaking products and equipment that are essential to industry.”
Nonetheless, thanks to a loophole in the United States–Mexico–Canada Agreement (USMCA) for free trade, SemiAnalysis concluded that “GPU servers are largely exempted from tariffs” in practice.
Other AI hardware was more affected. Analysis from WIRED found that out of over 1,300 items listed on NVIDIA’s export regulation compliance webpage, “less than one-fifth appear to be exempt from Trump’s new tariffs.”
Days later, in a memorandum on April 11th, President Trump named additional HTSUS headings and subheadings to exclude from Liberation Day tariffs.
These new exemptions protected not only AI chips, but also laptops, smartphones, and flat-panel displays.
However, chips won’t stay tariff-free for long—in a recent interview with ABC News, Commerce Secretary Howard Lutnick stated that “semiconductor sectoral tariffs” are coming in “probably a month or two.”
“This is not, like, a permanent sort of exemption,” said Lutnick. “These are things that are national security, that we need to be made in America.”
Accordingly, the Commerce Department just issued a request for public comments on its ongoing investigation “to determine the effects on national security of imports of semiconductors, semiconductor manufacturing equipment, and their derivative products.” This investigation began on April 1st.
When semiconductor sectoral tariffs arrive, they could be steep. In a January speech to Republican members of Congress, President Trump talked about a potential “25%, 50% or even 100% tax” on Taiwanese chips.
In summary, the future of AI chip imports—and with it, the future of AI—is rapidly evolving.
OpenAI Countersues Musk While Ex-Employees Oppose For-Profit Conversion
In December, OpenAI publicly detailed its plans to restructure from a nonprofit—technically, a nonprofit controlling a for-profit subsidiary with a cap on maximum investment returns—into a for-profit corporation with a nonprofit on the side.
This restructuring faces a significant legal challenge from Elon Musk, whose lawsuit could derail OpenAI’s plans. Here’s a timeline of major events:
February 2024: Musk sues OpenAI, claiming it has abandoned its original nonprofit mission in order to chase profit and power.
March 2024: OpenAI responds, stating that “Elon recognized a for-profit entity would be necessary,” and publishing old emails as evidence.
June 2024: Musk withdraws the original lawsuit without explanation.
August 2024: Musk comes back with a new lawsuit, which his lawyer describes as “much more forceful.”
It states that Altman “and his accomplices” engaged in “perfidy and deceit [...] of Shakespearean proportions.”
October 2024: OpenAI asks a federal judge to dismiss the lawsuit.
“The suit is the latest move in Elon Musk’s increasingly blusterous campaign to harass OpenAI for his own competitive advantage,” reads the court filing.
November 2024: Musk expands the lawsuit with claims of federal antitrust violations, adding Microsoft as a defendant.
New plaintiffs include Musk’s AI company, xAI—which recently acquired X—and former OpenAI board member Shivon Zilis, who has had four kids with Musk.
“Never before has a corporation gone from tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon,” begins the amended complaint.
November 2024: Attorneys representing Musk, xAI, and Zilis file for a preliminary injunction, which would immediately block OpenAI’s for-profit conversion.
OpenAI “cannot lumber about the marketplace as a Frankenstein, stitched together from whichever corporate forms serve the pecuniary interests of Microsoft and Altman at any given moment,” says the filing.
December 2024: OpenAI responds, submitting a new court filing and publishing more old emails.
January 2025: The Department of Justice (DOJ) and Federal Trade Commission (FTC) submit a Statement of Interest advising the court on how to interpret and apply federal antitrust laws. Their filing undercuts some of OpenAI and Microsoft’s arguments.
February 2025: A Musk-led group of investors offers to buy OpenAI for nearly $100 billion. This might force OpenAI to fund its nonprofit arm more handsomely during for-profit restructuring.
March 2025: The court rejects Musk’s request for a preliminary injunction, which required meeting a high standard of proof.
OpenAI welcomes the decision, criticizing Musk’s “baseless, cynically self-serving lawsuit, the false allegations propping it up, and other petty tactics like the so-called ‘bid.’”
However, there are still ways Musk could win.
More recently, OpenAI filed a 100-page counterclaim against Musk, arguing that “[OpenAI] and its people have suffered harm as a result of Musk’s unlawful campaign of harassment, interference, and misinformation. And those actions threaten further, irreparable harm.”
OpenAI indeed has a lot to lose. Without a for-profit restructuring, it might lose $20 billion from its recent $40 billion fundraising round, as well as the entire $6.6 billion from its fall fundraising round—that’s $26.6 billion in total losses. And OpenAI already plans to pour $19 billion into its Stargate data center project.
Meanwhile, twelve former OpenAI employees just filed an amicus brief siding with Musk. They argue that removing nonprofit oversight over OpenAI would “constitute a profound breach of trust with employees, donors, policymakers, and the public.”
According to legal records from April 9th, a jury trial for Musk v. Altman is “set for 3/30/2026 08:30 AM in Oakland, Courtroom 1, 4th Floor before Judge Yvonne Gonzalez Rogers.”
It’ll definitely be one to watch.
Rounds, Warner Introduce the Stop Stealing Our Chips Act
In SEC filings, NVIDIA recently disclosed that it will need licenses to ship cutting-edge H20 GPUs to China. These new controls, issued by the U.S. government, will curb approximately $5.5 billion in NVIDIA sales.
Of course, the addition of new export controls does not guarantee effective enforcement.
“China continues to utilize back-door methods to smuggle these chips into their country, creating a grave national security concern,” said Senator Mike Rounds (R-SD) in a press release for a new bill aiming to strengthen enforcement.
The bill is called the “Stop Stealing Our Chips Act.” Senator Mark Warner (D-VA) is a co-sponsor.
The Stop Stealing Our Chips Act would:
Establish a formal Bureau of Industry and Security (BIS) whistleblower program specifically for export control violations, with a focus on sensitive technologies like AI chips.
This is modeled after the SEC’s whistleblower incentive program.
Offer monetary awards (10–30% of any civil fines ultimately collected) to insiders or other tipsters who bring information that leads to a fine.
Guarantee confidentiality and strong anti-retaliation and judicial remedies for whistleblowers.
Create an Export Compliance Accountability Fund so that fines can pay for whistleblower awards and program operations.
As AI capabilities grow, so does the value of effective export control enforcement.
CAIP News
Mark Reddish wrote a blog post in support of the National AI Research Resource (NAIRR).
ICYMI: Episode 16 of the CAIP Podcast features Gabe Alfour, CTO and co-founder of Conjecture.
From the archives… President Trump’s Executive Order 14179 called for AI policy that promotes national security, economic competitiveness, and human flourishing. For context on the term “human flourishing,” see Jason Green-Lowe’s July 2024 blog post: “How to Advance ‘Human Flourishing’ in the GOP’s Approach to AI.”
Quote of the Week
Every mother I’ve talked to said they would have done the same thing.
—Linda Roan, a mother in suburban Denver who fell victim to an AI voice scam impersonating her daughter
This edition was authored by Jakub Kraus.
If you have feedback to share, a story to suggest, or wish to share music recommendations, please drop me a note at jakub@aipolicy.us.
—Jakub
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