At this point, you might as well use no cloud provider because at some point someone may be able to be leveraged? Whether that's by your country, another country, or some other nefarious entity.

That is where this is clearly going, yes. Which is why AWS is making this move, to try to head it off.

For those with nothing they particularly care about, it will be enough. For those with something to lose - currently small, but increasing, see the 80’s and the French Industrial espionage scandal - they’ll move back to on-prem if they haven’t already.