A new Senate bill would give the Commerce Department statutory power to block AI and communications technology tied to five foreign adversaries, codifying authorities that have operated under executive discretion.
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Scott and Hagerty introduce bill to block foreign adversaries from US AI
A new Senate bill would give the Commerce Department statutory power to block AI and communications technology tied to five foreign adversaries, codifying authorities that have operated under executive discretion.
The ICTS Supply Chain Security Act, introduced Tuesday by Senate Banking Committee Chairman Tim Scott and Senator Bill Hagerty, would empower the Commerce Department to prohibit transactions involving technology designed, developed, manufactured or supplied by entities owned, controlled or directed by China, Russia, Iran, North Korea or Cuba. The legislation creates a Senate-confirmed assistant secretary for information and communications technology supply chains within the Bureau of Industry and Security, placing the existing ICTS office into statute.
"Americans should not have to worry that China or Russia can use the technology in our cars, phones, or networks against us," Scott said. The South Carolina Republican previously worked with Hagerty to pass the GENIUS Act, which established a regulatory framework for stablecoins last year.
The Commerce Department's ICTS authority has already been deployed against Russian cybersecurity products and connected vehicle technologies containing Chinese and Russian hardware and software, according to the bill text. The legislation would formalize those powers while preserving public access to open-source AI software and exempting informational materials such as publications, films, podcasts and social media posts. It also clarifies that the ICTS process does not replace national security reviews conducted by the Committee on Foreign Investment in the United States.
Why this matters now
The bill arrives as the current congressional session approaches its summer recess and the November midterm elections, leaving a narrow window for passage unless the measure is attached to must-pass legislation. President Donald Trump issued an executive order earlier this month promoting U.S. AI innovation while pledging to "protect American ingenuity and intellectual property from exploitation and theft by adversaries."
The legislation targets the intersection of national security and industrial policy at a moment when AI infrastructure spending is accelerating. A recent Senate Banking Committee hearing on AI featured testimony that the hardware, software and network systems underpinning the AI race require stronger protection from external threats. The bill's covered countries list includes China, Hong Kong and Macau — a reflection of deepening concern over Beijing's technology sector and its advances in artificial intelligence.
What the bill does and doesn't do
The measure would codify a prohibition framework for covered transactions, replacing the current case-by-case review process with clearer statutory boundaries. It establishes reporting requirements to Congress and enforcement authority for violations. The assistant secretary position would oversee technology supply chain security across all covered sectors.
The legislation explicitly protects open-source AI software from restriction, addressing concerns that broad supply chain controls could inadvertently hamper the collaborative development model that has driven much of the AI field's progress. It also preserves existing CFIUS review processes for foreign investment transactions, avoiding overlap between the two national security frameworks.
The bill's prospects remain uncertain. With Congress focused on midterm campaigning and a packed legislative calendar, standalone passage before the August recess appears unlikely. However, the measure could advance as an amendment to must-pass legislation such as the National Defense Authorization Act, a common vehicle for national security-related provisions.
If enacted, the bill would give U.S. AI companies and their investors greater regulatory certainty about which foreign technology inputs are restricted, potentially benefiting domestic semiconductor and cybersecurity firms that compete with Chinese and Russian suppliers. The broader AI supply chain — spanning chips from Nvidia and Advanced Micro Devices to cloud infrastructure from Amazon Web Services and Microsoft Azure — would face new compliance requirements for any components sourced from covered adversary countries.
This article is for informational purposes only and does not constitute investment advice.
