Authored by Molly Schwartz, Rabobank cross-asset macro strategist,
Trading Playbooks
The advancement of one of China’s AI models, Kimi, has sharpened attention on the latest US plans to counter China’s growing AI challenge. Kimi is reportedly more powerful than several US flagship models, though not yet as powerful what lies on the frontier. However, Kimi operates at a fraction of the cost per token. That cost advantage raises the competitive threat to US AI leadership more broadly, including for other leading firms in the space, and Trump is once again taking a page out of China’s playbook by cracking down on the free market and unfettered competition. With tariffs, the US sought to limit China’s influence to bolster its own struggling manufacturing sector. Now, the more immediate question is whether Washington will do the same in an attempt to maintain its lead in the AI race…and if it will be successful.
According to Axios, “the Commerce Department last year considered adding multiple Chinese AI labs to its ‘Entity List,’ which would effectively cut off US access without a license.” The US is considering other avenues of approach as well, such as banning Chinese AI for national security reasons. But not all in the land of the free are happy with Trump’s interventionist approach to global markets. Axios reports that David Sacks said on X that “we are at a critical inflection point in AI policy,” warning that leading closed labs want the government to eliminate their open- source competition. For markets, the issue is not just who builds the best model, but whether AI becomes another front in the fragmentation of global capital, technology, and trade flows.
But protecting US AI domi
