Washington's export controls on Anthropic's advanced AI models backfired within days. The restriction, imposed four days before this report, banned foreign access to Claude's top tiers. The outcome contradicts the policy's stated intent to protect American AI dominance.

Competitors capitalized immediately. Cohere fielded a surge of government inquiries. DeepSeek closed a $7.4 billion funding round, the largest in Chinese AI history. Chinese labs responded by slashing token prices up to 99%, aggressively undercutting Western alternatives on cost alone.

The controls isolated Anthropic while accelerating adoption of Chinese models globally. Foreign customers who lost access to Claude have little incentive to wait for policy reversal. They're migrating to available competitors with lower switching costs and price advantages.

The same week exposed a separate vulnerability. Researchers discovered 144 poisoned npm packages targeting AI developers. The attack vector was straightforward: malicious code harvested credentials from machines downloading the packages. It exploited the npm ecosystem's open distribution model. AI startups relying on these libraries unknowingly deployed credential-stealing malware into their supply chains.

This convergence reveals two hard truths about AI policy. Unilateral export restrictions shift market share rather than secure technology. Competitors fill the void faster than restrictions prevent access. China's response demonstrates that capability, not policy, determines dominance long-term.

Second, the AI supply chain remains fragile. Open-source ecosystems enable rapid development but create infiltration points. A single poisoned package reaches thousands of projects. Developers lack visibility into dependencies three or four layers deep. The credential theft targeting npm users shows that AI infrastructure inherits all the security problems of traditional software, then adds urgency and high stakes.

DeepSeek's funding and price cuts signal confidence in Chinese labs' technical capabilities. The scale of capital flowing to