US Orders Federal Agencies to Remove DeepSeek AI From Systems, Citing National Security Concerns

Reviewed byNidhi Govil

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The Department of Homeland Security has mandated all federal civilian agencies to purge DeepSeek AI products and services from their IT systems within 60 days. The order extends beyond DeepSeek's own offerings to include third-party tools built using DeepSeek implementations, raising questions about AI supply chain transparency and U.S.-China tech competition.

Federal Agencies Face 60-Day Deadline to Eliminate Chinese AI Technology

The Department of Homeland Security order mandates that US federal agencies remove DeepSeek AI products and services from their IT systems within 60 days

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. Homeland Security Secretary Markwayne Mullin issued the directive under the Federal Acquisition Supply Chain Security Act of 2018, targeting Hangzhou DeepSeek Artificial Intelligence Co., Ltd., the developer behind the R1 and V3 models

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. The ban affects federal civilian agencies including the Departments of Treasury, State, and Justice, though it does not extend to private consumers, state and local governments, or Department of Defense national security systems

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. Agencies can request exceptions by submitting written justifications to the Cybersecurity and Infrastructure Security Agency, citing mission-critical functions or national security considerations

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Source: PYMNTS

Source: PYMNTS

Third-Party AI Risks Create Compliance Challenges

The DHS ban extends beyond direct DeepSeek AI products and services to encompass third-party products and services developed using DeepSeek implementations

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. This broad scope creates significant compliance challenges, as the order fails to clearly define what "developed using" means in practice

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. Katie Moussouris, founder and CEO of Luta Security, pointed out that the directive could technically cover any model derived from DeepSeek and any software whose developers used DeepSeek to write or test code

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. The ambiguity extends to AI gateways like OpenRouter and Vercel AI Gateway, which route requests to various AI providers and could inadvertently connect users to DeepSeek models without their knowledge

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. Supply chain risk assessment becomes particularly complex because AI software bills of materials don't record which tools developers used during the creation process

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Source: The Hill

Source: The Hill

Data Sovereignty Concerns Drive Security Restrictions

The Department of Homeland Security order cites multiple threat vectors related to data sovereignty and the People's Republic of China legal framework

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. DHS raised concerns about DeepSeek's handling of user data, warning that sensitive information from US government users could potentially be accessible to Chinese authorities under Chinese law

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. The company's servers are located in the People's Republic of China, where the legal system grants extensive authority to government cyber and intelligence functions to access private infrastructure

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. DeepSeek's account generation process collects personally identifiable information and may track and digitally fingerprint users, while its prompt response process may result in the transfer of sensitive data to the People's Republic of China

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. Erik Avakian, technical counselor at Infotech, explained that organizations using hosted AI services potentially send intellectual property and confidential business information into environments where they have little visibility or control

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Security Vulnerabilities Compound National Security Risks

Beyond data access concerns, the order highlights security vulnerabilities within DeepSeek models themselves

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. NIST research found DeepSeek more vulnerable to prompt injection than US models and easier to jailbreak, though every model faces these challenges to varying degrees

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. Open-source security research published in February 2025 uncovered multiple critical vulnerabilities in iOS mobile apps using DeepSeek technology

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. A December 2025 report on DeepSeek mobile apps for Android and iOS cited plaintext information leaks, links to servers run by Chinese tech firms, and shortcomings like lack of SSL pinning

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. Most notably, in January 2025, the Chinese AI company leaked more than one million log entries, including chat histories, API secrets, and other sensitive information through an unsecured database

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U.S.-China Tech Competition Intensifies Around AI Development

The federal civilian agencies ban represents an escalation in U.S.-China tech competition, building on previous restrictions targeting intelligence and national security systems

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. A law passed in December 2025 initially targeted DeepSeek's use in intelligence and national security systems before the latest order extended restrictions to federal civilian agencies

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. The US accused DeepSeek and five other Chinese AI companies, including Alibaba and Moonshot AI, of using large-scale model distillation to extract information from American AI systems in a September report

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. OpenAI and Anthropic separately raised concerns about DeepSeek's alleged use of model distillation, with OpenAI telling US lawmakers it observed suspected attempts by DeepSeek to distill its models

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. China's Foreign Ministry spokesperson Mao Ning responded that Beijing opposes overstretching the concept of national security and politicizing technology and trade issues, pledging to resolutely safeguard the legitimate rights and interests of Chinese enterprises

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Source: AIM

Source: AIM

Geopolitical Implications Reshape AI Market Dynamics

The timing of the DHS ban may benefit American AI companies like Anthropic that hope to go public soon, as open-weight models from China represent significant competition in terms of capabilities and cost

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. Government agencies unable to deploy Chinese models may face higher costs from favored US model makers like OpenAI and Anthropic

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. China is reportedly considering export restrictions on 23 AI-related technologies, including chip designs and certain advanced AI models, to address security and misuse risks

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. The Chinese AI lab faced scrutiny from governments and regulators globally since its R1 reasoning model shook the AI industry in January 2025, triggering a sharp sell-off in Nvidia shares

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. The Defense Information Systems Agency started blocking DeepSeek on Pentagon IT networks in January 2025, followed by similar steps from the US Navy, NASA, and the US House of Representatives

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. Watch for potential retaliatory measures from China and increased scrutiny of AI supply chains across both government and enterprise sectors as this technology rivalry continues to reshape global AI development and deployment strategies.

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