Banning What Beats Us
The legal creativity behind a Chinese AI ban that never has to happen
When I was in London a couple of weeks ago, I saw sleek, compact cars I had never seen before — they were BYDs. Most of my fellow Americans probably wouldn’t recognize them either because we priced them out of existence (effectively banning them). Chinese electric vehicles face a 100% Section 301 tariff at the U.S. border.
We also ban Chinese-developed software and hardware from connected vehicles. Which is probably why BYD never seriously considered even trying to enter the U.S. passenger car market. They felt the chilling effect of likely laws before they even existed.
It’s fairly easy to ban a physical good like a car. It typically arrives at a port, on a ship, and with a customs entry and a declared price. So we can hit it with tariffs, antidumping duties, import bans, entity listings, the works.
That’s if we feel threatened. BYD cars by many accounts are great vehicles. They’re also cheap and would give U.S. consumers a more affordable alternative to Tesla.
We also constantly cite national security concerns, but that’s difficult to do for everything that comes from China. Solar panels are the perfect example. We banned these from China not because they were national security threats, but because we were concerned about competition. But that still didn’t stop the cost collapse in that market.
And we can’t forget about TikTok. This is the case that previews everything that’s about to happen with Chinese AI. Congress passed a divest-or-ban law with overwhelming bipartisan majorities, the Supreme Court upheld it unanimously, and then President Trump decided not to enforce it. Now a joint venture has materialized to comply with the divestiture requirements, but it should not go unnoticed that the strongest Chinese ban that America ever attempted went an entire year unenforced.
Do you notice the pattern here? First, almost everything that comes from China gets the national security concern label, but we’re most aggressive about products that threaten American industries. And second, the bans that work best are those against physical objects and market access.
TikTok's ban worked for one weekend when app stores complied, only to be suspended by a presidential memo. Which shows how software doesn’t break on enforcement, but on will.
There’s another reason to be skeptical of banning Chinese AI. Models like the one recently released by the Moonshot AI founder I wrote about are open models. If you know anything about America’s history fighting open source, you’ll know we’ve lost almost every battle.
Yes, the iPhone and Windows desktop are closed gardens, but open source won the infrastructure layer in America, and that’s the one that really matters. Look at essentially any server and you’ll find Linux powering it. And that’s true for practically any supercomputer on Earth.
The same is true for the internet. And programming languages. The substrate of computing is open, with closed tech built on top of it.
AI model weights are the same substrate. They are layers that enterprises can build on, which is precisely the layer where open source has won every previous contest in tech history.
I’m a child of the 1990s who witnessed Microsoft fighting off Linux and the U.S. government itself contemplating what it’s deliberating now — whether it can treat published code as a controlled good.
Did you know we tried treating encryption software as a munition under export-control laws? That was until a federal court ruled that source code is speech protected by the First Amendment and the government backed down. So the closest legal precedent for controlling published model weights is a fight the government retreated from 30 years ago.
Which brings me to July 2026, Moonshot AI, and its open model Kimi K3.
Kimi K3 cannot be stopped
Kimi K3 is the largest open-weight system anyone has ever built — 2.8 trillion-parameter model and a million token context window.
For those who don’t speak AI tech, Kimi K3 is a beast. It’s not the best model in the world (on most overall rankings it still trails the top American systems), but it’s close and more importantly, free. “Close and free” should terrify a U.S. business model built on “best and metered.”
And we’re no longer debating how far behind Chinese labs are from American ones. Which is why you’re seeing hysterical articles like this one appearing in the Wall Street Journal, with American tech CEOs sounding the alarm on Chinese AI.
Why the alarm bells? Because Moonshot’s API runs at roughly a third of the cost of Anthropic’s top-tier pricing, which isn’t a bloodbath for American AI labs, but that bloodbath could be around the corner.
On July 27th, Moonshot AI plans to publish K3’s full weights. Which means that anyone with the hardware to run it can access frontier-adjacent AI intelligence at basically zero cost. And keep in mind that Moonshot ran out of GPUs 48 hours after launch. It had to pause new subscriptions.
The July 27 release fixes this problem because once the weights are public, Moonshot's customers become its serving capacity. Most individuals may not have the hardware to run it, but it becomes a real option for small enterprises looking to keep costs low.
This is why you’ve probably seen all the reporting about the Trump administration weighing its responses. It’s why you may have heard about the Twitter threads from Dean Ball, David Sacks, and others debating about things like AI communism and weaponized regulatory uncertainty.
The U.S. government could open the toolkit I mentioned in the first part of this essay, plus some new instruments built for software and Chinese AI: federal procurement restrictions, national security advisories, liability rules for American companies, and public pressure campaigns.
But the reality is that on July 27th, Kimi K3 could be published for the world to download. Once that genie is out of the bottle, it will be on Hugging Face, GitHub, and hard drives everywhere, with no recall possible. And that’s the challenge with most software — it’s weightless, infinitely copyable, and any legal grip closes on nothing tangible.
Read on to see what happens when a government wants to stop something it cannot technically stop, and cannot politically agree to formally try…
