Nvidia CEO Jensen Huang during the China International Supply Chain Expo in Beijing.
(Bloomberg) — President Donald Trump’s controversial plan to take a cut of revenue from chip sales to China is leading to concerns that the US government will find new ways to start charging companies for a range of business activities with other countries.
Experts and people familiar with the matter said the surprise deal, in which Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay 15% of their revenues from Chinese AI chip sales to the US, potentially provides a path to enter the Chinese market despite severe export controls, tariffs and other trade barriers.
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The question that companies must now confront is whether the risk is worth taking. People familiar with the matter, who asked not to be identified discussing private deliberations, said companies are struggling to figure out what the president’s order means for their future, especially given the unpredictable nature of Trump’s decision-making.
“This is truly bizarre and unusual, and the troubling thing — beyond the individual instances of AMD and Nvidia — is the possibility that this will be expanded,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. “Everything is now ‘national security,’ according to the new definition, which means it’s all subject to export licenses and then they give you a license based on your contribution.”
Nvidia CEO Jensen Huang during the China International Supply Chain Expo in Beijing.Photographer: Andrea Verdelli/Bloomberg
There are concerns that US trade agencies could begin charging fees to companies every time there’s a meeting to discuss tariffs, according to people familiar with the matter who asked not to be identified discussing private deliberations. The Commerce Department’s Bureau of Industry and Security, which issues export licenses, wasn’t consulted about the revenue deal, according to people familiar with the matter who asked not to be identified discussing private conversations.
Trump administration officials defend the idea as a smart way to generate revenue for the US government and suggest it will extend well beyond the chips sector.
“I think we could see it in other industries over time,” Treasury Secretary Scott Bessent said in an interview with Bloomberg Television on Wednesday. “I think right now this is unique, but now that we have the model and the beta tests, why not expand it?”
WATCH: US Treasury Secretary Scott Bessent says the plan for Nvidia Corp. to share 15% of the revenue from sales of its H20 AI accelerator in China with the US government could be used in other cases over time.Source: Bloomberg
Bessent defended the deal and rejected any national-security concerns around the decision to sell Nvidia’s H20 chip to China — something that had been earlier barred for fear of giving China a boost in the artificial-intelligence race.
“There are no national security concerns here,” Bessent said. “We would not sell any of the advanced chips. So, the H20, I don’t know whether you’d say they’re four, five, six levels down the chips stack.”
Either way, the deal highlights how Trump has pushed to open a wave of new revenue streams including by taking ownership shares of companies or extracting higher fees to live or work in the US.
The US is weighing sales of a so-called “gold card” residency permit, it won a “golden share” to have direct say over corporate actions by United States Steel Corp., and it’s secured investment pledges and potential revenue-sharing in country-level tariff talks. That’s aside from the barrage of product tariffs that have at times left massive dislocations in globally traded markets.
The matter further surprised China hawks in Congress, who have been unimpressed by the administration’s reassurances. Rep. John Moolenaar, the Michigan Republican who chairs the US House Select Committee on China, questioned the legal basis for the move and suggested it does an end-run around controls put in place to limit the sale of sensitive technology to US adversaries.
“Export controls are a front-line 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,” he said.
It also raises questions about where the administration will steer the revenue. Trump has mused about issuing tariff rebate checks — though he has yet to seriously pursue the idea — while at other times he’s said it would go toward narrowing the large budget deficit.
The administration had debated launching a sovereign wealth fund before shelving those plans for now. It’s too soon to say whether the administration will seek to revive the fund and steer revenue there, one official familiar with deliberations said.
“Trump’s aides argue that these measures will strengthen America’s AI leadership by maximizing its global influence and market share,” Hal Brands, a professor at the Johns Hopkins School of Advanced International Studies and a former Pentagon official, wrote in Bloomberg Opinion. “Yet it is also possible that they will simply eat into America’s innovation advantage.”
–With assistance from Mackenzie Hawkins and Derek Wallbank.
(Updates with details of consultation process in fifth paragraph.)
