US Bans DeepSeek AI Products from Federal Agencies; China Accuses Washington of Discrimination

The response came after Homeland Security ordered the removal and exclusion of products developed by the Chinese company.

Key Points

· US government restrictions: The US Department of Homeland Security (DHS) ordered the removal of products developed by Chinese AI start-up DeepSeek and other products relying on its open-source technology from the IT systems of civilian executive-branch agencies. The order also prohibits future acquisitions of the targeted products.

· National security concerns: US officials argue that China's legal system allows its government extensive access to Chinese companies' infrastructure, potentially exposing sensitive American government data and enabling China to generate actionable intelligence.

· China's response: On 20 October 2026, China's Ministry of Commerce and Foreign Ministry accused Washington of using national security as a pretext to discriminate against Chinese companies and restrict their technological development.

· Demand to withdraw restrictions: China called on the United States to withdraw its restrictive measures, asserting that Chinese laws protect cybersecurity and data privacy and enable companies to comply with applicable international requirements.

· Threat of countermeasures: China's Commerce Ministry warned that Beijing would take resolute countermeasures if Chinese companies were suppressed or restricted by the United States.

· DeepSeek's low-cost AI breakthrough: DeepSeek attracted global attention last year after claiming to have developed a powerful AI system with substantially fewer computing resources than expected and a training cost of less than $6 million.

· Dispute over development costs: US agencies alleged that DeepSeek's reported training cost did not reflect the true cost of data allegedly acquired through malicious means. Major American AI companies, including Anthropic and OpenAI, have raised similar concerns about Chinese AI firms' practices.

· China rejects allegations of AI model copying: Beijing rejected accusations by the FBI and other US agencies that DeepSeek and other Chinese AI companies had engaged in large-scale, targeted copying of advanced American AI models to close technological gaps, allegedly with the awareness of the Chinese government.

· New Chinese technology controls: China's Commerce Ministry and Ministry of Science and Technology proposed new export and licensing controls on selected AI technologies. The proposal seeks to protect China's domestic industry and mirrors aspects of US restrictions on advanced technology exports. The proposed controls have not been finalised, and previously released open-source models are excluded.

· Progress despite chip restrictions: The United States has restricted exports of advanced semiconductors to China to constrain its AI development. Nevertheless, DeepSeek and other Chinese firms have continued to advance. DeepSeek said its newer model relied on chips produced by Chinese technology company Huawei, highlighting China's efforts to reduce dependence on foreign technology.

· Competitive advantage of open-source AI: DeepSeek, Moonshot AI and Alibaba offer developers access to AI models that can be downloaded and used without the fees associated with some competing services. Their relatively low costs and competitive performance have attracted interest from American businesses and increased competitive pressure on companies such as OpenAI and Anthropic.

· Additional US removal orders: According to a spokesperson for the Cybersecurity and Infrastructure Security Agency, officials from the Department of Defense, Homeland Security and the National Intelligence Program issued additional exclusion and removal orders on the preceding Friday, requiring agencies to identify and remove DeepSeek and affiliated products.

· Restrictions already in place: Several US federal bodies, including the Commerce Department, Navy, Defense Information Systems Agency and NASA, had already prohibited DeepSeek's use. States including Texas, New York and Virginia have also restricted its use in government work.

· International restrictions: France and Australia have restricted DeepSeek technology in government systems, while Italy previously removed its products from app stores over data-protection concerns.

Effect and Significance

1. US–China technology rivalry intensifies

The restrictions extend the competition between Washington and Beijing beyond semiconductor exports into AI software, data security and government technology procurement.

2. Implications for AI businesses

US companies using DeepSeek or integrating its models into their products may need to identify affected systems and replace restricted technology where government rules apply. The precise extent of federal agencies' dependence on DeepSeek remains unclear.

3. Growing technological separation

US restrictions on Chinese AI and semiconductor technology, combined with China's proposed export controls, could create increasingly separate technology ecosystems, increasing compliance costs for multinational businesses.

4. Competitive pressure on US AI developers

Low-cost Chinese open-source models provide alternatives to commercial AI platforms. Their adoption could intensify competition over pricing, model performance and access to developers.

5. Data security versus market access

Washington maintains that restrictions are necessary to protect sensitive government information. Beijing argues that national security is being used to suppress Chinese companies and limit fair technological competition.

6. Potential impact on global AI development

Restrictions on technology transfers and access to AI systems could affect international collaboration, innovation and the availability of AI tools. The dispute also raises questions about how governments should balance national security with the benefits of open-source technology.

Bottom Line

The United States has tightened restrictions on DeepSeek and products incorporating its technology in federal government systems, citing risks to sensitive data and national security. China has condemned the measures as discriminatory and threatened countermeasures.

The dispute signals an expanding US–China technology conflict in which AI models, semiconductors, data security and export controls are becoming increasingly interconnected.

[ABS News Service/21.10.2026]

China on Tuesday (20.10.2026) accused the United States of discrimination “under the pretext of so-called national security” after a U.S. order banned products by the Chinese artificial intelligence start-up DeepSeek from the technological systems of many U.S. government agencies.

The American order, published on Monday but issued in July, and the Chinese recriminations inflamed tensions between the two nations amid their frenzied race for A.I. primacy. Some experts have likened the close competition to the nuclear arms race of the 20th century, with potentially huge stakes for humanity.

Citing fears that China may gain access to sensitive U.S. data from DeepSeek to “produce actionable intelligence,” the Department of Homeland Security ordered the removal of all the company’s products — and those from other firms reliant on its open-source offerings — from the information technology systems in civilian executive branch agencies. It also banned future acquisitions of the products.

In issuing the order, which went into effect this summer, U.S. officials contended that the Chinese legal system allows that government extensive access to Chinese company infrastructure, making the U.S. government vulnerable to the exposure of sensitive information.

Chinese officials on Tuesday accused the United States of using disingenuous national security concerns to suppress Chinese companies.

China’s Ministry of Commerce said in a statement that China had passed laws to protect cybersecurity and data privacy to ensure that its companies can comply with relevant laws worldwide. It called on the United States to “withdraw” any restrictive measures.

“China has consistently opposed the overgeneralization of the concept of national security and the politicization of science, technology and trade issues,” Mao Ning, a spokeswoman for China’s Foreign Ministry, said at a briefing on Tuesday. “We will resolutely safeguard the legitimate rights and interests of Chinese enterprises.”

DeepSeek stunned the world last year when it announced that it had built one of the most powerful A.I. systems with far fewer computer chips than many thought necessary, and at a remarkably low training cost of less than $6 million.

U.S. agencies accused DeepSeek last month of being “misleading,” saying that figure did not reflect “the true cost” of data acquired maliciously. The accusations echoed those made by major American A.I. companies like Anthropic and OpenAI.

China’s Commerce Ministry called those claims groundless, and part of a U.S. effort to monopolize the A.I. industry. It vowed that “China will take resolute countermeasures” if Chinese companies are suppressed or restricted as a result.

The Chinese government rejected accusations by the F.B.I. and other agencies that DeepSeek and other major Chinese A.I. companies engaged in “aggressive, malicious and targeted” industrial-scale copying of frontier A.I. models developed in the United States “in an attempt to bridge the technological and performance gaps,” most “likely” with their government’s awareness.

Last week, China’s Commerce Ministry and its Ministry of Science and Technology proposed new export and licensing controls on some A.I. technologies to protect its domestic industry, mirroring the American approach. While the Chinese proposal has not been finalized and excludes open-source models that have already been released, the newly listed technologies now face registration requirements.

Tensions between the two countries are growing at a time when some say that coordination is paramount to the A.I. race.

The United States has in recent years restricted the exports of advanced computer chips to limit China’s A.I. development. DeepSeek and other Chinese companies have raced forward despite the limits. And this past spring, DeepSeek said its new model relied on chips made by the Chinese tech firm Huawei, a milestone in China’s effort to reduce the need for foreign technology.

DeepSeek is among several prominent Chinese companies, like Moonshot AI and Alibaba, that allow developers to download open-source systems without cost and build products with them, unlike OpenAI and Anthropic, which can charge fees.

That has made Chinese A.I. appealing to American businesses, giving them access to models deemed nearly as effective by many experts at a much lower cost and potentially raising challenges for Anthropic and OpenAI ahead of planned initial public offerings.

It is not clear how reliant U.S. agencies have been on DeepSeek or on products that integrate its technology. The Homeland Security order gave no specifics, and when reached for comment, the department did not answer questions about the extent to which the targeted products had been integrated.

In a statement to The New York Times on Tuesday, a spokesperson for the U.S. Cybersecurity and Infrastructure Security Agency said that new exclusion and removal orders addressing DeepSeek were issued on Friday by the heads of the Department of Defense, Homeland Security and the National Intelligence Program requiring agencies to identify and remove DeepSeek and affiliated products.

DeepSeek could not be reached by phone on Monday, and it did not immediately respond to an email seeking comment.

The Homeland Security Department is not the first federal or state agency to restrict or ban the use of DeepSeek in its official systems or devices.

The Commerce Department, the Navy, the Defense Information Systems Agency and NASA have all barred its use, and states including Texas, New York and Virginia have prohibited the use of DeepSeek products in government work.

Other countries have made similar moves. Among them, France and Australia last year blocked the use of DeepSeek tech from all government systems. Italy also banned its products from app stores, citing concerns about data protection.