WASHINGTON — In a significant pivot from prior U.S. restrictions on technology transfers, President Donald Trump announced Monday that the United States will permit Nvidia Corp. to export its powerful H200 artificial intelligence chips to "approved customers" in China and other nations, in exchange for a 25% revenue share paid directly to the U.S. government. The decision, framed by Trump as a boon for American innovation and workers, marks a departure from the stringent export controls imposed during the Biden administration, which aimed to hinder China's technological ascent amid escalating geopolitical rivalries. Trump revealed the policy in a post on his Truth Social platform, stating he had personally informed Chinese President Xi Jinping of the change, adding that Xi "responded positively."
"$25% will be paid to the United States of America. This policy will support American Jobs, strengthen U.S. Manufacturing, and benefit American Taxpayers," Trump wrote, emphasizing that the arrangement would not encompass Nvidia's cutting-edge Blackwell series or the forthcoming Rubin architecture, which remain restricted for national security reasons. He lambasted the Biden-era measures as shortsighted, claiming they compelled U.S. chipmakers to "spend billions of dollars building ‘degraded’ products that nobody wanted," which stifled innovation and disadvantaged American labor. "That Era is over," Trump declared, signaling a broader recalibration of trade policies to prioritize economic gains while maintaining safeguards on the most advanced technologies.
The H200, released in the second quarter of 2024, represents Nvidia's second-most advanced AI processor, boasting nearly six times the performance of the H20 variant previously approved for limited Chinese sales under Biden's rules. These graphics processing units (GPUs) are pivotal for training large-scale AI models, powering applications from generative tools like ChatGPT to data center operations and machine learning frameworks. Nvidia, the world's most valuable company with a market capitalization exceeding $3 trillion, has long lobbied for eased restrictions, arguing that blanket bans only accelerate China's domestic chip development by rivals like Huawei. In a statement applauding the move, Nvidia said: "Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America." CEO Jensen Huang, who met with Trump last week, has repeatedly warned that exclusionary policies could cost the U.S. its AI leadership, potentially forfeiting billions in revenue—estimated at $10-15 billion annually from the Chinese market alone.
This policy extends beyond Nvidia, with Trump noting that the Commerce Department is finalizing similar frameworks for competitors like Advanced Micro Devices (AMD), Intel, and others. The revenue-sharing mechanism—dubbed a "surcharge" by some analysts—builds on an August agreement where Nvidia and AMD committed 15% of H20 sales proceeds to the U.S. government, a novel approach to monetize exports while ostensibly funding domestic semiconductor initiatives like the CHIPS Act. Proponents, including Commerce Secretary Howard Lutnick, argue it injects funds into American R&D and manufacturing, potentially generating $5-7 billion yearly for federal coffers amid ballooning deficits. The deal also aligns with Trump's "America First" ethos, positioning the U.S. to dominate global AI supply chains by fostering dependency on American hardware, even as it navigates Beijing's retaliatory curbs on rare earth minerals essential for chip production.
Yet the announcement has ignited fierce backlash from national security hawks, particularly a coalition of senior Senate Democrats who branded it a "colossal economic and national security failure." In a joint statement, Senators Jeanne Shaheen (D-N.H.), Chris Coons (D-Del.), Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.), Brian Schatz (D-Hawaii), Andy Kim (D-N.J.), Michael Bennet (D-Colo.), and Elissa Slotkin (D-Mich.)—key figures on foreign relations, armed services, appropriations, and banking committees—urged Trump to rescind the policy immediately. They contended that granting Beijing access to H200 chips would "squander America’s primary advantage in the AI race," empowering Chinese firms to close the gap with U.S. leaders like OpenAI and Google.
The senators highlighted recent admissions from DeepSeek, a prominent Chinese AI startup, which identified the scarcity of advanced U.S. chips as its "single biggest impediment" to rivaling American counterparts. "With this decision, President Trump is poised to remove that barrier," they warned, forecasting enhancements to China's military prowess, including AI-driven hypersonic weapons, cyber warfare tools, and surveillance systems. Slotkin, a former CIA analyst, emphasized in follow-up remarks that such transfers could "turbocharge Beijing's bid for technological and military dominance," potentially eroding U.S. edges in intelligence and autonomous systems. Warren, in a separate letter to Lutnick last week, raised ethical concerns over Nvidia's lobbying, alluding to a $10 million donation from CEO Huang toward White House renovations as possible influence-peddling.
Bipartisan unease has spurred legislative countermeasures. Earlier this month, Senators Pete Ricketts (R-Neb.) and Chris Coons introduced the SAFE CHIPS Act, a measure co-sponsored by China hawks like Tom Cotton (R-Ark.) and Jeanne Shaheen, to impose a 2.5-year moratorium on easing AI chip export licenses to China, Russia, Iran, or North Korea. The bill mandates Commerce Department denials for high-risk transfers, citing smuggling risks—underscored by a December 8 Justice Department bust of a $160 million H100/H200 black-market ring linked to Chinese entities. House Select Committee on China Chair John Moolenaar (R-Mich.) echoed these fears, warning that H200 proliferation could fuel Beijing's "civil-military fusion" strategy, integrating commercial AI into PLA operations.
The policy's rollout remains fluid. Commerce officials are vetting "approved customers"—likely excluding state-linked firms like Huawei or military end-users—via enhanced end-use monitoring and audits. However, Beijing's response is uncertain; Chinese regulations already bar many firms from U.S. tech due to "backdoor" paranoia and self-reliance drives, potentially limiting uptake despite demand. Analysts like Alex Stapp of the Institute for Progress decry it as a "massive own goal," arguing the H200's sixfold power leap over the H20 could inadvertently subsidize Huawei's Ascend series, projected to match Nvidia by 2027. Chris McGuire, a Council on Foreign Relations expert and former NSC official, labeled it a "big, self-inflicted wound," risking U.S. AI hegemony for short-term fiscal gains.
This saga unfolds against a backdrop of intensifying U.S.-China tech decoupling. The Biden administration's 2022-2024 controls, enacted via the Export Control Reform Act, blocked H100/H200 sales to curb supercomputing advances, prompting Nvidia to design the throttled H20 at a $4 billion cost. Trump's reversal—his second major easing after the H20 deal—reflects a pragmatic shift, buoyed by Huang's advocacy and Treasury talks averting rare earth shortages. Yet it clashes with the White House's October AI Action Plan, which vowed to "win the AI race" through fortified barriers. Market reactions were muted: Nvidia shares rose 2% to $185 pre-market, while the Nasdaq dipped 0.14% amid Fed anticipation.
As implementation details crystallize—expected within weeks—the debate encapsulates a core tension: Can the U.S. profit from controlled tech flows without arming a rival? Democrats' outcry, amplified on platforms like X where users decried it as "handing Xi a win," underscores fears of eroded deterrence. Trump, undeterred, positions it as savvy dealmaking, but with Congress reconvening in January, the SAFE CHIPS Act could force a reckoning. For Nvidia and allies, it's vindication; for skeptics, a gamble where 25% of the pie might leave America with crumbs in the long AI shadow war.
