The problem is that there are network effects at play - the more people you have using your models, the more training and fine-tuning data you're accumulating, so the faster you can develop the next frontier model. Not to mention the fact that more users means more revenue to fund your next-gen model training.
Perhaps the US administration is gambling that US citizens on their own provide enough of a training data and revenue flywheel for them to keep their AI development edge.
The next interesting question will be - will the US share this capability with her traditional strategic allies (e.g. five-eyes countries), or is it truly America First (or, 'America Alone')?