U.S. President Donald Trump announced in a post on Truth Social on December 9 that he had approved Nvidia to sell its AIH200 chips to China, on the condition that the U.S. would take a 25% commission on each chip sold. Trump noted that Chinese President Xi Jinping reacted positively to the news.
The Wall Street Journal and Bloomberg reported that this decision followed weeks of intense debate between Trump and his advisory team. Trump justified the decision by noting that the administration would still create American jobs and maintain leadership in AI.
The chips cannot be shipped directly from their manufacturing base in Taiwanto China; instead first be inspected and reviewed in the U.S. and can then be transferred to Chinese clients after paying the 25% tariff.
Jensen Huang's Diplomatic Balancing Act
Financial reports indicate that Nvidia's revenue from China has rapidly shrunk due to the ban, and Huang has consistently argued that excessive U.S. export restrictions have not only failed to curb China's AI development but also inadvertently supported domestic heavyweights like Huawei.
Huang has frequently visited Washington and fostered a close personal relationship with Trump since the November 2024 election. He discreetly appeared on Capitol Hill and at the White House last week for private meetings with Trump to make a similar case. Apparently, this time, Trump listened.
While the H200 is still a mainstay for Nvidia, it belongs to the previous-generation 'Hopper' architecture. Trump emphasized that neither Nvidia's more powerful 'Blackwell' nor its still-in-development 'Rubin' chips were part of the deal.
Hawkish Backlash and Congressional Showdown
Trump's decision has sparked significant controversy in Washington, particularly among China hawks who see it as a dangerous concession.
Chris McGuire, a senior fellow at the Council on Foreign Relations, criticized the move as a terrible decision for global AI technology export controls.
In fact, just days before Trump's announcement, a bipartisan Senate group introduced the SAFE Act, aiming to codify existing export restrictions, freezing H200 and other advanced chip exports to China for 30 months. Republican Senator Pete Ricketts and Democratic Senator Chris Coons are primary sponsors of the legislation.
Trump's executive order bypassed hawkish sentiments in Congress, demonstrating his intent to assert control over China policy. The 'AI Czar' David Sacks and Commerce Secretary Howard Lutnick are believed to have pushed for the decision as part of a more transactional approach to dealing with China.
Beijing's Reaction: Will Xi Jinping Agree?
The most uncertain variable in this deal lies across the Pacific. While Trump claims President Xi responded positively, Beijing's true stance might be more complex.
Although the H200 is powerful, it remains a secondary product to the U.S. government, which is still trying to curb China's AI development.
Huang has stated he is unsure whether China will accept the H200, but that he is sure they will no longer accept downgraded chips.
Moreover, while Nvidia, with a gross margin of 73.4%, might theoretically absorb some of the costs from the 25% surcharge, in practice, this fee is likely to be passed on to Chinese clients. This "toll" paid to the U.S. government is likely to be viewed not only as an economic cost but also as a political humiliation for China's AI development.
Beyond Nvidia: Who Else?
The chip clearance extends beyond Nvidia, with Trump explicitly mentioning that manufacturers such as Intel and AMD also qualify, provided they comply with the same rules.
The announcement spurred enthusiastic market reactions, with Nvidia and AMD stocks rising about 2% in after-hours trading. The news could also be a positive sign for struggling Intel, in which the U.S. government currently holds a 10% stake, although its share in the high-end AI chip market is small.
The H200 clearance deeply reflects Trump'stransactional governance style. Previous export controls aimed to 'block'; now, they serve to raise profit by monetizing state power. The move appears to signal that the U.S. does not mind China's AI development, provided it uses American technology and allows the U.S. to make a buck.
You've read it. Now let's talk. Follow us on X. Editor: Chase Bodiford
