By Ana Malamud
A few decades ago, AI research was largely confined to academic circles. Today, AI has become an integral part of national public policies worldwide. Governments are determined to secure every segment of the AI supply chain—from chipmaking and data centres to the next generation of AI startups—by implementing measures that risk distorting global trade. In this high-pressure contest where there is little to no room for error, countries are unwilling to depend on foreign technology and are scrambling to ensure their technological autonomy.
Donald Trump’s Bet on Made in USA AI
A prominent example of what commentators now call “AI nationalism” is the United States’ recently announced Stargate initiative. Shortly after Donald Trump’s inauguration, the newly elected president, joined by CEOs from major American tech firms OpenAI, Softbank, and Oracle, unveiled what he called “the largest AI infrastructure project, by far, in history”. The president stressed that the project would prioritise American-made technology, emphasising the “Made in the USA” label while promising to create 100,000 American jobs almost immediately.
This monumental project is poised to have far-reaching consequences. Beyond its environmental and energy impact, the initiative is primarily backed by private funding, with 500 billion dollars pledged over the next four years by Trump’s partners. To put this in perspective, a Goldman Sachs report estimated that global AI investment would approach 200 billion dollars by 2025, a figure that will likely need revision after this announcement. However, while this global funding fuels AI advancements, its benefits will largely remain within American borders. As Trump stated, American industries, labour, and energy will reap the rewards, making “Made in USA” a cornerstone of the Stargate initiative.
“AI Nationalism” Around the Globe
While the United States has ambitious plans, it is far from alone in championing domestically developed AI. Europe, for example, is navigating a delicate balance between regulation and innovation but is nonetheless pouring funds into its promising AI startups. By 2023, Germany ranked third among governments investing the most in AI, with France in fifth place. These strategic investments are designed to create national AI champions, such as France’s Mistral and Germany’s Aleph Alpha, which aim to rival American and Chinese tech giants.
In Saudi Arabia, Crown Prince Mohammed bin Salman is investing billions in AI development and partnering with global tech companies like Amazon, IBM, and Microsoft. India is also actively fostering AI innovation, particularly in semiconductor manufacturing, by offering substantial production-linked incentives. The Indian government is urging cloud-computing giants to establish data centers within the country, a vital infrastructure for training AI models. As a result, Indian companies like Sarvam are emerging as significant players in the international AI landscape.
Beyond Funding: Export Controls, Strategic Alliances, and Regulatory Weapons
The competition for AI supremacy is fierce, prompting nations to deploy a variety of strategies beyond funding. Governments are enacting new laws, drafting policies, and seeking expanded authority to gain an edge in the AI revolution. As nations grow increasingly protective of their AI capabilities, competition over resources, talent, and intellectual property is intensifying.
This protectionism manifests in several ways: restricting foreign investments, limiting technology transfers, and curbing partnerships in critical AI sectors. Such measures create additional obstacles for corporations, including difficulties in market access and compliance with regulations, which can have cascading effects on global supply chains. Furthermore, forced technology transfers and industrial espionage remain significant risks in this competitive environment.
For instance, the Biden administration introduced export restrictions on semiconductors to nations like China and Russia, aiming to prevent the use of advanced chips for military purposes. Similarly, the primary goal of the CHIPS Act was to strengthen the US' domestic chip-making capabilities to decrease America’s dependence on Taiwanese semiconductor producer TSMC, the global leader in advanced chip manufacturing. These measures have had a noticeable trade impact, complicating efforts by these countries to produce. In response, Chinese officials have criticised these policies as unfair, viewing them as barriers to economic growth and technological advancement.
However, these decisions go beyond economic concerns—they are about national security and survival in the global arena. No country wants to risk dependence on foreign technology. Global leaders understand the magnitude of the AI revolution. As Russian President Vladimir Putin stated, the nation that leads in AI will dominate the world.
AI Sovereignty: Reshaping Geopolitics
The idea of AI sovereignty centres on nations prioritising domestic AI development to serve their own populations. To achieve this, many countries are implementing trade-restrictive measures, leading to the formation of strategic alliances and rivalries focused on controlling and securing AI technologies and the resources needed for their development.
One notable example is the agreement between the United States, Japan, and the Netherlands to limit exports of chipmaking tools to China. These trade restrictions reflect a broader trend of nations taking increasingly protectionist stances on technology. Such approaches mark a significant departure from free trade principles, reshaping industrial policies and geopolitics.
This shift is most evident in the escalating technological competition between the United States and China. This rivalry has become a defining feature of their strategic relationship, as both nations recognise AI’s transformative potential for driving economic growth and achieving military dominance. As Jake Sullivan said, "If it’s China and not the United States determining the future of AI on the planet, I think that the stakes of that are just profound".
Finding the right balance remains a significant challenge. Commerce Secretary Gina Raimondo highlighted the critical need to prevent the most advanced AI technologies from falling into the hands of foreign adversaries while simultaneously fostering their broad distribution and shared benefits among allied nations.
Meanwhile, the recent release of DeepSeek, a Chinese chatbot directly competing with US-based ChatGPT, has sent shockwaves through global markets. DeepSeek’s adoption was massive, reaching number one position in 57 different countries, including the US. What sets DeepSeek apart is its ability to achieve such advanced capabilities despite strict US export controls on cutting-edge chips, highlighting a relentless competition where innovation continues to thrive despite challenges.
The global AI race is not just about technological innovation, it is a battle for economic sovereignty, geopolitical influence, and national security. AI nationalism has become a driving force behind industrial policy, creating opportunities for domestic innovation while disrupting global trade and cooperation. This fierce competition underscores a sobering reality: in the quest for AI dominance, no country is willing to be left behind. As the stakes rise, the pursuit of AI sovereignty will continue to influence the world’s political, economic, and technological landscape for the years to come.
Sources: New York Times, El País, The Economist, Goldman Sachs, The Verge, Reuters, Lazard, Centre for International Governance and Innovation, CNN, Center for Strategic and International Studies, LSE Blogs.
By Ana Malamud
Edited by Nina Gush & Sarah Valkenburg
Comments