Aaron Bartnick
In September, the leader of the world’s most valuable company lambasted China hawks for “destroying” the American dream. To be tough on China was a “badge of shame,” Nvidia CEO Jensen Huang argued. “It’s not patriotic, not even a little bit.” His comments came after withering criticism over a proposed deal with the Trump administration to allow new semiconductor exports to China in exchange for a 15 percent kickback to the U.S. government. Then, on Monday, President Donald Trump announced that he would allow Nvidia to export cutting-edge chips to China—with capabilities at least a generation ahead of China’s most advanced technologies—in exchange for an even higher kickback of 25 percent.
For Huang, the incentives are clear: China represents a $50 billion, nearly untapped market for Nvidia that is likely key to realizing investors’ lofty expectations for the company’s growth. But selling advanced semiconductors to the United States’ greatest adversary is national security malpractice akin to selling the Soviets nuclear technology after World War II. What’s more, the deal appears to be illegal under the U.S. Constitution’s Export Clause, which explicitly prohibits taxes or duties on exports to foreign countries from any state. This is why the administration is still struggling to develop a legal mechanism to facilitate the H20 deal Trump authorized earlier this year. Nvidia, the only company with the standing to sue, seems happy to accept giving the U.S. government a large cut of the anticipated Chinese profits.
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