President Donald Trump greenlit U.S. tech giant Nvidia to sell critical chips to Chinese vendors, despite warnings from experts that it would narrow the country’s lead in the artificial intelligence arms race.
Nvidia, which became the largest company in the world last year with a market capitalization of approximately $4.6 trillion, will now be free to export a controlled supply of its highly coveted H200 AI chips to the Chinese market.
“We applaud President Trump’s decision to allow America’s chip industry to compete to support high paying jobs and manufacturing in America,” Nvidia told the press in a prepared statement Wednesday. “Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America.”
The deal, signed Tuesday, will be limited by a series of vetting mechanisms that are meant to ensure China is unable to import more than 50% of the amount of chips sold in the United States and that these exported chips will not be used for military purposes.
The U.S. will also take in up to 25% of the revenue generated by the sale of these chips to Chinese vendors.
The prospective sale of these chips has alarmed both Republicans and Democrats, who see Chinese technological advances as a rising threat to U.S. hegemony.
The House Foreign Affairs Committee held a hearing on Wednesday morning — titled “Winning the AI Arms Race Against the Chinese Communist Party” — that brought in a panel of China experts to speak on the sale.
Chairman Brian Mast (R-FL) called U.S. supremacy in the AI industry “key to America’s national security.”
“We have an advantage over China. That advantage did not happen by accident,” Mast said. “Xi Jinping hates how badly [the CCP] needs our chips.”
Former deputy U.S. national security adviser Matt Pottinger told the committee that China’s dearth of computing power and its “inability to produce chips at scale” form the “crucial bottleneck” keeping the U.S. ahead of the CCP in the AI realm.
Former principal deputy U.S. national security adviser Jon Finer voiced “great concern” over the “ability to enforce” limitations on Chinese imports, as well as the “dangerous precedent” this deal could set for the export of “even more advanced chips.”
“The stakes of U.S.-China competition have only grown higher,” Finer said.
The expert panel, which also included American Compass founder and chief economist Oren Cass, told the committee that due to China’s totalitarian, one-party governance under the Communist Party, it would be a nearly impossible task to prevent privately purchased chips from aiding the country’s military infrastructure.
Chinese tech giants such as ByteDance, DeepSeek, and AliBaba were named as ostensibly private companies that are nonetheless directly answerable to the CCP through mechanisms such as state-sponsored trade associations and regulatory levers.
Multiple Democrats voiced outrage at the Trump administration’s deal, drawing particular attention to the 15% cut of sales.
“Our national security should not be negotiable, and it should not be for sale,” said Rep. Gregory Meeks (D-NY).
“Do we sell F-35s to China if we get a 15% cut?” asked Rep. Brad Sherman (D-CA).
The California lawmaker went on to express a broader concern about the existential dangers of a “greater intelligence than human intelligence on the planet,” comparing it to the extinction of the neanderthals amid the rise of homo sapiens.
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The Chinese government has reportedly approached the import of H200s with extreme caution, warning companies on Tuesday not to purchase the U.S.-manufactured chips unless absolutely necessary.
“The wording from the officials is so severe that it is basically a ban for now, though this might change in the future should things evolve,” a Chinese government source told Reuters on Wednesday.
No reason was reportedly given for the strict China-side limitations. CCP officials may be seeking to ensure domestic production of similar chips is not crushed by imports or may be concerned about creating a reliance on the H200s, which could be leveraged as a bargaining chip in future U.S. trade negotiations.
