eu weighs ai chip export limits to china amid us deal
brussels, Friday, 22 August 2025.
The EU is considering limiting AI chip exports to China as part of a trade agreement with the US. The potential deal, valued at $40 billion in American AI chip imports, aims to establish security standards, preventing technology leakage. Concerns are rising in the US and Europe about China’s access to advanced semiconductors. These restrictions could significantly affect companies like Nvidia and TSMC, impacting their sales and manufacturing operations supporting Chinese AI development. The EU trade chief stated semiconductors should not ‘fall into the wrong hands’.
Trade deal framework
The EU and the US have reached an agreement framework, with the EU agreeing to a 15% tariff on 70% of its exports to the US, as initially agreed upon in July [1][4]. The agreement also involves the EU potentially exempting American goods from certain climate laws and reducing tariffs on various American products, including industrial goods [1]. While China is not explicitly mentioned in the 19-point joint statement, the agreement signals a closer alignment between the EU and the US on technology, security, and commerce, which could strain Europe’s relationship with China [1].
Details of the ai chip agreement
As part of the trade deal, the EU has committed to purchasing $40 billion worth of AI chips from the US [1][3][4]. This procurement is intended for the construction of European data centers [3]. The EU will also adopt US security standards to prevent technology from being leaked to destinations of concern, a term often referring to China [1]. This move indicates that the US aims to maintain control over the final destination of these chips, despite having previously rescinded an order that limited which EU member states could purchase them [1].
Impact on trade relations
The EU-US trade agreement is poised to reshape the landscape of tariffs and trade commitments between the two regions [5]. The US will impose a 15% tariff on most EU imports, encompassing goods like automobiles, pharmaceuticals, semiconductors, and timber [5]. In return, the EU has pledged to eliminate tariffs on all industrial goods from the US and provide preferential market access for specific American agricultural products [5]. This agreement is a key step towards de-escalating trade tensions and fostering greater economic cooperation between the US and EU [5].
Broader economic implications
Beyond AI chips, the EU’s commitments extend to purchasing $750 billion in American energy products, including liquefied natural gas, oil, and nuclear energy, by 2028 [3][5]. Furthermore, European companies are expected to invest an additional $600 billion in strategic sectors within the US by 2028 [3][5]. These substantial investments and procurement plans highlight a deepening economic partnership, potentially influencing market dynamics and investment strategies across various sectors [5]. The agreement also addresses digital trade barriers, with the EU agreeing not to implement network usage fees [5].