Trump’s latest proposal would cede the United States’ AI advantage.

By Aaron Bartnick, a global fellow at Columbia University’s Center on Global Energy Policy.

U.S. President Donald Trump shakes hands with Nvidia CEO Jensen Huang after Huang delivered remarks at an event in the White House in Washington on April 30. U.S. President Donald Trump shakes hands with Nvidia CEO Jensen Huang after Huang delivered remarks at an event in the White House in Washington on April 30. Andrew Harnik/Getty Images

• U.S. Foreign Policy
• Security
• United States
• China

December 12, 2025, 2:38 PM

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.

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.

Huang is free to pursue what he believes is best for his business. But both Huang and Trump display shocking naivete in thinking China will remain dependent on the United States for a technology that is rapidly determining the 21st-century balance of power. By selling China some of the most advanced U.S. hardware, Trump is voluntarily surrendering a widening strategic lead in artificial intelligence and effectively handing Washington’s primary adversary computational power that could facilitate a range of dire national security consequences.

Semiconductors provide the computational power driving revolutionary advances in AI, biotechnology, and quantum computing that are already reshaping our daily lives and national security. China views its dependence on advanced semiconductors as a “stranglehold” and set a goal to be 70 percent self-sufficient in chip production by the end of this year. Yet, despite investing some $48 billion into its National Integrated Circuit Industry Investment Fund and providing generous state subsidies as part of its Made in China 2025 program, China is on track to hit just 30 percent self-sufficiency this year, mostly in “mature node” chips that are far less advanced than Nvidia’s cutting-edge H200 and Blackwell chips. Access to advanced U.S. chips is therefore critical for China to keep up in the AI race until the country can develop its own indigenous capabilities.

Leading technology policy experts estimate that China is at least 18 months away from developing its own equivalent to the Nvidia H200 chips that Trump now wants to sell. This gap is only growing, which is why China has spent millions of dollars trying to steal and smuggle these precious chips into China illegally. Indeed, the U.S. Justice Department made public this fact the very same day that Trump’s new proposal would effectively let Chinese agents carry the chips right out the front door of Nvidia’s California headquarters.

Trump’s technology policy team believes the path to “global AI dominance” is to reduce regulatory barriers such as export controls and send U.S. firms on an all-out sprint for global market share. This will, in theory, unlock economies of scale that will drive a few winners to stratospheric heights and leave the rest of the world dependent on the U.S. “AI technology stack” of hardware, software, infrastructure, and talent. This approach is straight out of the software-as-a-service venture capital playbook of growth at all costs and has proved very successful for investor-turned-AI czar David Sacks.

But managing the global balance of power is not the same as scaling a start-up, and the problem with publicly broadcasting this strategy to achieve global market dominance is that adversaries such as China will act accordingly to safeguard their national interests. When Huang and Trump first attempted the maneuver with Nvidia’s H20 chips, a less advanced unit that roughly matches China’s own leading Huawei chips, the Chinese government responded by instructing firms not to buy Nvidia products at all and instead direct their business to preferred domestic champions. This left Nvidia with no appreciable sales growth and made it clear that China refuses to accept foreign dependence where domestic alternatives exist.

China may welcome the new H200s initially—but if past is precedent, Huawei or another national champion will rapidly release a new product eerily similar to the H200, leading to a precipitous drop in Nvidia’s sales as China captures that $50 billion domestic market for itself. We have seen this play many times. Telecommunications company Cisco, for example, dominated China’s early internet infrastructure until Huawei successfully cloned its source code, allowing Beijing to systematically purge the U.S. giant in favor of its own sovereign enterprise. Yet apparently the temptation of the world’s second-largest economy—and perhaps the hubris that comes with building the world’s most valuable company—has led Huang to think perhaps this time will be different.

The national security consequences of advancing Chinese AI and biotechnology by nearly two years will be profound. Already, researchers suspect that by the end of Trump’s second term, AI could be capable of waging mass-scale cyberwarfare campaigns and helping lone-wolf terrorists to develop bioweapons. This transfer of compute power could ultimately supercharge China’s military research and development, allowing Chinese AI to automate scientific breakthroughs in fields such as stealth and hypersonics that could permanently erase America’s qualitative edge. No amount of profit is worth handing adversaries the ability to unleash such tools faster than the United States can build defenses against them.

Thankfully, Congress is aware of the severe constitutional and national security threats this policy poses; within 24 hours of Trump meeting Huang last week, it introduced the bipartisan SAFE Chips Act to freeze any further loosening of U.S. chip export controls. Congress must pass this bill as quickly as possible, ideally with veto-proof majorities that can force Trump to either sign the bill or abandon the deal. Meanwhile, chip companies excluded from the deal or even hawkish national security or taxpayer advocacy groups could file lawsuits to attempt to stop these sales, though it is unclear whether they will ultimately have standing for such challenges. Still, if even a single H200 reaches China before Trump and Haung are forced to abandon this misguided proposal, much of the knowledge transfer damage will already be done.

Nvidia is an incredibly successful U.S. business that employs tens of thousands of people, has unlocked meaningful scientific progress, and represents an outsized portion of Americans’ 401(k) growth this past year. But its decision to sell chips to China comes at the expense of the U.S. Constitution and national security.

• U.S. Foreign Policy
• Security
• United States
• China

Aaron Bartnick is a global fellow at Columbia University’s Center on Global Energy Policy. He previously served as the assistant director for technology security and governance at the White House Office of Science and Technology Policy.

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