Long-time critics of China in Washington complained about the government’s decision to Donald Trump to allow Nvidia sells its second most advanced artificial intelligence chip to the Asian country, citing concerns that Beijing could harness the technology to equip its military.
United States President Donald Trump added that the US will charge a 25% tax on these sales and that AMD and Intel will be able to sell similar microprocessors to the country.
The decision “puts our competitive advantage up for sale, all for a 25% commission on chip exports,” said Brad Carson, former deputy secretary of the U.S. Army. “When China starts fueling its military with AI based on US chips, the world will regret that decision.”
The move is the biggest example of Trump’s push to relax restrictions on sales of advanced American AI technology to China, as he seeks to expand overseas markets for U.S. companies and faces Beijing’s imposition of export controls on rare earth minerals, key ingredients for manufacturing a wide range of electronic components.
It also marks a sharp reversal from his first term, when Trump attracted international attention by cracking down on Chinese access to U.S. technology, citing allegations that Beijing steals American intellectual property and leverages the technology obtained to bolster its military, which Beijing denies.
But the American government, led by White House AI “czar” David Sacks, now argues that shipping advanced AI chips to China discourages Chinese competitors such as Huawei from redoubling efforts to catch up to Nvidia and AMD’s more advanced chip designs.
If, in five years, AI chips made by sanctioned Chinese telecommunications equipment giant Huawei are everywhere, “that means we lost… We can’t let that happen,” he said at an event in January.
But many in Washington disagree. Stewart Baker, a former Homeland Security and National Security Agency official, said the notion that the U.S. can keep China dependent on U.S. chips by allowing them to have the H200 is “an illusion.”
“There is no world in which they will not continue to push as hard as possible to have a domestic industry that will ultimately be aimed at Nvidia’s bankruptcy and America’s dependence on Chinese AI,” Baker said.
Saif Khan, who served as director of Technology and National Security at the White House National Security Council under former President Joe Biden, agrees. Allowing H200 sales to China “could significantly erode US advantages (in AI) and boost China’s military modernization.”
However, some consider the impact to be more limited, including James Mulvenon, a Chinese linguist and military expert who authored a study that helped convince the first Trump administration to sanction Chinese chipmaker SMIC in 2020.
“Regardless of this decision, the Chinese government has made clear that it is not its long-term strategic objective to rely on Nvidia or any other Western technology, so these gains are likely to be transitory,” he said.
