Expect 'Dramatic Increase' in Export Penalties, Commerce Secretary Says
The Trump administration plans to substantially increase fines against companies that violate export controls, including against China, Commerce Secretary Howard Lutnick said this week. He also said the U.S. is planning to incorporate export control commitments into free trade deal negotiations as a way to incentivize trading partners to better restrict their sensitive technologies.
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Lutnick, speaking March 18 during the annual Bureau of Industry and Security conference, said the administration is particularly concerned about shipments of advanced semiconductors destined for China, alluding to the country as an “evil” adversary that is looking to destroy “Western greatness.”
He said President Donald Trump “cares about BIS, and I care about BIS,” calling the agency the “intellectual front line of the fight between good and evil, between freedom and liberty and a controlled communist future.”
He called China a “relentless and continuous” threat to “our way of life,” adding that BIS will be “fundamental” to the administration’s plans to counter the country.
“We are the winner, but we need to fight hard,” Lutnick said. “We need to hold the line hard. We need to be much, much smarter. We need to be much more vigilant.”
Part of that effort will include more stringent export enforcement, Lutnick said. Although the Biden administration oversaw a frenetic export enforcement pace (see 2501020005), including a record $300 million penalty on Seagate Technology in 2023 after BIS said it violated Huawei-related foreign direct product rule restrictions, Lutnick suggested fines will grow.
“This is my call to action,” he said. “We are going to seek, in this administration, a dramatic increase in enforcement and fines for people who break the rules. We have had enough of people trying to make a dollar supporting the people who seek to destroy our way of life.”
Lutnick pointed to the recent success of China’s artificial intelligence model DeepSeek (see 2502030031 and 2501300067), saying it shows how China has been able to illegally buy U.S. chips to power its own advanced technology.
“How outrageous is that? Do any of you in this room actually believe the nonsense that DeepSeek was built without our chips?” Lutnick said. “What a load of baloney.”
China has reportedly evaded certain U.S. export controls by buying leading semiconductor firm Nvidia’s latest chips and routing them through third parties in nearby countries (see 2503100017).
“People took our chips and redirected them to China for money, and sometimes it's not that much money, and sometimes it's a lot of money,” Lutnick said. “But they're seeking to destroy our way of life by assisting those who are against it, and it is that blatant and clear.”
Lutnick also said he wants to persuade more American trading partners to impose export licensing rules similar to those imposed by the U.S., adding that the administration is going to “try to bring export controls into those trade deals.” Then other countries will have to decide if they’re “aligned with America and freedom and liberty and the Western way of life, or are they so hooked to making a little more money or buying something a little more cheaply that they would sell their soul?” Lutnick said.
“Because that's what you're doing. You'd be selling your soul to those who seek us harm.”
Lutnick said BIS will be the administration’s “blueprint for our strategic and tactical actions going forward,” and he urged industry officials at the conference to “partner” with the agency to make sure export controls aren’t circumvented.
“BIS has incredible tools,” he said. “And you're seeing the Trump administration use those tools for the betterment of our country.”