If you get caught with illegal guns and illegal chemicals, well... there are consequences. Bad actors will always find a way, at the risk of getting caught.

However, the vast majority of people will rely on commercial AI models.

Wait, so now you are saying that consumption of models that fall outside of the tax jurisdiction would be illegal?? What other goods or services have this sort of precedent?

"API call to a company that routed it to a Chinese model? Believe it or not, jail."