Trump’s Nvidia China deal raises security concerns

U.S. President Donald Trump on Aug. 11 approved an arrangement that lets Nvidia resume selling certain AI chips in China in exchange for the U.S. government taking 15% of revenue from those sales. The decision drew swift bipartisan criticism and questions about national security.

The Commerce Department has begun issuing export licenses for Nvidia’s H20, a China-compliant accelerator first introduced in 2024. Trump signaled he may also permit a reduced-capability version of Nvidia’s next-generation Blackwell chip for the market, describing a performance cut of roughly 30% to 50%. AMD also said the government approved applications to export some AI processors to China.

While the move reopens a major supply of U.S. accelerators to Chinese buyers, officials said they do not view sales of H20-class chips as compromising national security because the part is less capable than Nvidia’s top U.S. offerings. White House Press Secretary Karoline Leavitt said, “It stands with these two companies, perhaps it could expand in the future to other companies. I think it’s a creative idea and solution.”

Lawmakers in both parties warned the approach risks turning export decisions into a pay-to-play process for sensitive technology. “Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities,” said Rep. John Moolenaar (R, MI-2), chair of the House Select Committee on China.

Rep. Raja Krishnamoorthi (D, IL-8), the panel’s ranking member, said, “We shouldn’t be gambling with our national security to raise revenue.” According to a Cato Institute analysis, the arrangement “gives at least the appearance of putting national security up for bid.”

Amid the criticisms, Nvidia reiterated that it follows rules set by the U.S. government for participation in worldwide markets and expressed hope that export control rules will allow American firms to compete in China and globally. AMD similarly asserted that it complies with all U.S. export controls.

The revenue-sharing model reflects a broader swing toward state-directed economic policy that critics say mirrors elements of Beijing’s playbook. Supporters call it pragmatic industrial policy while detractors see a sharp break from free-market norms. “Up until today, there has never been a consideration of how much companies need to pay to receive an export license,” trade lawyer Jeremy Iloulian said.