The only consensus in most discussions about the artificial intelligence boom seems to be that the United States and China are on the brink of a Cold War.
The two superpowers have not shied away from competing for AI supremacy in recent years.
U.S. and Chinese officials are spending increasing amounts of time on semiconductors, critical minerals, and export policy to ensure AI wins in the coming years.
More recently, China appears to have caught up in a key area: AI model performance, leaving American technology analysts, politicians, and tech executives wondering what to do about it.
In early 2025, Chinese AI platform DeepSeek began competing with products from OpenAI, Anthropic, and Google.
Last week, Beijing-based startup Moonshot AI’s open-source model KimiK3 both impressed and horrified U.S. technology officials.
Some U.S. officials have accused Chinese companies of a practice often called distillation, a polite way of saying that Chinese companies may have stolen their own AI technology from U.S. companies.
On Tuesday, US Treasury Secretary Scott Bessent appeared on CNBC and said the White House is considering imposing sanctions on China and some of its AI models. This will limit the use of these models in the United States.
“We’re finding watermarks from the U.S. large-scale language model on many of the Chinese models, and this is unacceptable,” Bessent said.
Chinese companies deny many of the accusations, but Chinese executives and officials have expressed doubts about the U.S. companies.
In 2025, multiple Chinese media outlets reported that government officials were concerned about “backdoor capabilities” in U.S. semiconductors that could enable the compromise of Chinese AI models.
The US AI and semiconductor companies at the center of these reports, such as Nvidia, have repeatedly denied the claims.
Nevertheless, paranoia between the two countries continues and has further escalated in recent months as US technology stocks have experienced volatility due to Chinese AI product announcements.
That paranoia has driven financial media personalities like CNBC’s Jim Cramer to campaign against China’s AI technology.
“Don’t let companies use these Chinese models to save a few bucks,” he posted Tuesday, referring to open source AI models that are attractive to many because of their low operating costs.
“This is a vital national security matter,” he continued. “I have great respect for the Chinese people, but these companies are conveniently run by the People’s Liberation Army.”
Whatever happens in the U.S. and China regarding policies to gain an advantage, the situation could impact companies and organizations that have spent millions of dollars on AI tools.
Florian Douetteau, CEO and co-founder of Dataiku, a data science and AI platform company, sees the deepening rift between the US and China as a wake-up call for companies that don’t own the AI they rely on.
Dueteau said he tells his customers to make sure to track what AI tools they use, where they come from, and how exposed those tools are to potential geopolitical conflicts.
“We need to examine what-if scenarios and test how the use of AI would be affected,” he said, comparing it to the extensive protections in place at large banks in case their computer infrastructure is hit by unforeseen events such as sanctions or tariffs.
“They often have a laptop hidden somewhere in a large vault so they can manage payroll and other items in case everything goes wrong,” he said.
Dueteau added that given the situation between the US and China, it is advantageous for companies to “rely on local computing and consider the possibilities of open source AI models.”
Proponents argue that open source models, where code and technical specifications are freely available, will democratize AI.
However, US companies such as OpenAI and Anthropic do not follow an open source approach, preferring more tightly integrated proprietary architectures.
Both companies have recently come under increased scrutiny from President Donald Trump’s White House, which has sought to control the products they release over cybersecurity concerns.
This latest push further complicates how the United States should respond to China’s open source model that could dominate the U.S. market.
Duetout said uncertainty means businesses and organizations need to be more prepared than ever.
“We shouldn’t be in a situation where we get caught up in a geopolitical AI barrage,” he said.
“Business leaders need to look at it in terms of strategy and autonomy, and also be aware of their current operational footprint.”
