A new flashpoint has opened in the US-China AI race, with Washington calling Chinese copying of American models theft while Nvidia's Jensen Huang shrugs it off as normal competition.

• US Treasury Secretary Scott Bessent has called "distillation" — training your own AI on another model's output — outright theft, and floated sanctions on foreign firms that do it.
• Jensen Huang disagrees, saying testing and stripping down a rival's product to see how it works is just competition.
• Huang admits he would rather nobody learned from Nvidia's products, but says competition makes everything better; if a company hates it, it should simply cut off the customer.
• US cybersecurity officials accuse Chinese AI firms of industrial-scale copying that breaks American terms of service.
• Anthropic has named Alibaba's Qwen models and DeepSeek as involved in what it calls illegal distillation; China denies it.

Outlook: Expect more pressure for sanctions and tighter terms of service on US AI models, with Nvidia pushing back against restrictions that would shrink its China business.