WASHINGTON, D.C. — The U.S. Department of Homeland Security on Monday published a final rule ordering federal agencies to remove Chinese artificial‑intelligence startup DeepSeek’s products from all government systems, citing “multiple threat vectors” associated with the firm’s large‑language models.

China’s Ministry of Commerce issued a statement the same day warning that the United States “will bear the cost of any retaliatory measures” if the ban is enforced without diplomatic resolution. Spokesperson Liu Yan said the action “undermines fair competition and could trigger a cascade of counter‑measures affecting U.S. firms operating in China.”

HHS officials defended the decision, noting that a risk assessment completed in July identified at least three vectors—data exfiltration, model poisoning and supply‑chain compromise—linked to DeepSeek’s API services. “Protecting federal data is non‑negotiable,” said DHS senior adviser Karen Mitchell, adding that the rule applies to all contractors handling classified or sensitive information.

Investors are watching the dispute closely. DeepSeek, founded in 2022, raised $200 million in a Series B round last year and claims its models process more than 10 billion tokens daily. The ban could force the company to pivot away from the U.S. market, which accounts for roughly 12 percent of its projected 2025 revenue, and may affect venture‑capital flows into Chinese AI startups, which saw a 35 percent decline in Q3 2024.

Analysts caution that a tit‑for‑tat escalation could reverberate across the global tech supply chain, prompting other nations to reassess procurement policies. A recent study by the Brookings Institution estimated that AI‑related export controls could shave up to 0.4 percentage points off global GDP growth by 2030 if multiple economies adopt similar bans.

Key Takeaways

• U.S. DHS cites three specific security threats in its final rule against DeepSeek.
• China warns of retaliatory steps that could impact U.S. companies operating in its market.
• The dispute may influence global AI investment trends and regulatory approaches.

The DeepSeek case highlights the growing intersection of technology, national security and international trade, underscoring how policy decisions in Washington can ripple through markets and diplomatic relations worldwide.