The Distillation Double Standard: Why Washington's New AI Sanctions Threat Is Unenforceable

The White House wants you to believe that the line between American innovation and Chinese emulation is a hard border, easily policed by trade blacklists. Treasury’s recent threat of sanctions against Chinese AI startup Moonshot, following claims the firm distilled Anthropic’s proprietary Fable model, suggests a clean-cut case of intellectual property theft. The technical reality of how modern AI is built tells a far more complicated, and embarrassing, story for Western labs.

Distillation—