My thought as well. They will approve every new American trained LLM but they can't control the release of free Chinese LLMs. Therefore, the only card they can play is to simply make Chinese LLMs illegal to use for American companies and Americans.

Ultimately, this will grant more power to OpenAI, Anthropic, and Google due to regulatory capture but it hurts the AI industry overall.

Only the us AI industry. It will put the US in a ditch with it's only asset being the ability to surveill its citizens for negative money and negative innovation. The rest of the world will keep spinning just fine