A group of Democratic senators has warned that the White House’s decision to cut 10% of the budget for the agency overseeing semiconductor export controls could weaken the U.S.'s ability to stay ahead of China in the AI race.

According to Democratic Senator Patty Murray, who is a member of the Senate Appropriations Committee, the Trump administration cancelled $20 million in funding for the Commerce Department’s Bureau of Industry and Security on Monday. The White House is making another attempt to block federal spending without Congress’s approval. This time, it plans to cut a total of $3 billion, which is about 10% of the budget for BIS. The BIS is responsible for creating and enforcing rules for shipping American technology to China and other countries. Capitol Hill lawmakers, led by Senator Elizabeth Warren. They sharply criticised the decision and questioned Trump officials about the consequences on national security due to the funding reduction. 

In a letter to Director Russ Vought on Wednesday, the senators stated that the president's Office of Management and Budget "is in essence announcing to our adversaries that it is open season on US technology." Lawmakers have asked the Office of Management and Budget (OMB) to quickly explain the legal reason behind the funding freeze and to clarify how it will affect the Bureau of Industry and Security (BIS). An OMB spokesperson did not immediately respond to a request for comment.

BIS plays a key role in the technology competition between the U.S. and China. It is responsible for trade restrictions on advanced AI chips and the tools needed to produce them. These restrictions, which started during President Donald Trump’s first term and were significantly expanded under President Joe Biden, aim to stop China from developing advanced AI that could strengthen its military. 

Commerce Secretary Howard Lutnick has promised to increase penalties for companies that break the rules. Recently, he also sanctioned dozens of Chinese firms for allegedly supporting Beijing’s military technology efforts. “We are committed to using every tool at the department’s disposal to ensure our most advanced technologies stay out of the hands of those who seek to harm Americans,” Lutnick said in a statement about the sanctions package. When asked about BIS funding levels during his confirmation hearing, where the budget has remained relatively stable for ten years, Lutnick responded that "proper resourcing is critical to our export control and enforcement regime." A spokesperson for the Commerce Department, which was also copied on the Wednesday letter, did not immediately respond to a request for comment.

Since taking office, Lutnick has overseen the exit of several senior BIS officials. For weeks, agency staff stopped processing export license applications, causing frustration among many tech companies, according to people familiar with the matter. However, some approvals have resumed in recent weeks. A Commerce official stated that they are working to “resolve” the broader holds, as reported by the news site Export Compliance Daily.