The US almost blacklisted DeepSeek for contributing to China’s military and intelligence — but the White House held back to avoid escalating tensions

DeepSeek was recommended to be added to the US Entity List
The company was accused of assisting Chinese military and intelligence
White House avoided blacklisting companies ahead of Trump China visit

Despite claims from Anthropic that Chinese AI firm DeepSeek distilled its Claude model to improve their own models, and further evidence that DeepSeek supported Chinese military and intelligence operations, the US has held back on adding the firm to the Entity List.

Exclusive Reuters reporting, citing people familiar with the matter, claims the White House has avoided adding DeepSeek and more than 100 other Chinese firms to the blacklist to avoid inflaming tensions between the two countries any further.

The White House was recommended to add the firms to the Entity List by an interagency committee, but the administration avoided taking action ahead of President Donald Trump’s visit to China, where he met with Xi Jinping.

DeepSeek avoids US Entity List

Anthropic’s claims of distillation state that DeepSeek used over 16 million exchanges with 24,000 fraudulent accounts in order to distill the Claude model’s abilities.

“Distillation can be legitimate: AI labs use it to create smaller, cheaper models for their customers. But foreign labs that illicitly distill American models can remove safeguards, feeding model capabilities into their own military, intelligence, and surveillance systems,” Anthropic said in a statement on X. The claims made by Anthropic also target two other Chinese AI firms: Moonshot, and MiniMax.

Distillation can be legitimate: AI labs use it to create smaller, cheaper models for their customers.But foreign labs that illicitly distill American models can remove safeguards, feeding model capabilities into their own military, intelligence, and surveillance systems.February 23, 2026

Many US companies have turned to using DeepSeek as a cheaper alternative to US frontier models such as OpenAI’s GPT-5.5 – the use of which accrues a far higher cost compared to models produced in China.

If the White House were to add DeepSeek to the Entity List, it would likely face a backlash from American companies looking to leverage cheaper alternatives from competing Chinese brands.

The US has taken some steps to limit Chinese influence over American technology, including the ban on all Chinese labs from vetting US-bound devices, and sanctions on several major Chinese companies such as Huawei.

The White House is navigating a delicate balancing act. The current global shortage of semiconductors, exacerbated by AI demand, is further worsened by Chinese control over rare-earth minerals essential to the production of components essential to tech manufacturing. If the US were to add a swathe of Chinese firms to the entity list, China could retaliate by further restricting access to exports of these materials.