Trump’s AI Chip Deal Sparks Security and Sale Concerns

Photo: AP

In August 2025, President Donald Trump surprised many by striking a unique deal. He allowed two leading U.S. chipmakers—Nvidia and AMD—to resume selling AI chips to China after a previous ban. However, the government required them to give 15% of their sales revenue from China back to the U.S.

A Radical Shift in Export Policy
For decades, U.S. policy was clear: sensitive technology exports were barred for security reasons. No amount of profit could override those decisions. Now, that principle has been overturned. Under Trump's deal, U.S. firms can pay for access to foreign markets—raising a major red flag.

Lawmakers across party lines criticized the move. Representative John Moolenaar, a Republican, warned that “export controls are our first defense—and selling licenses for a fee risks weakening that wall.” Representative Raja Krishnamoorthi, a Democrat, added that "putting a price on our security sends a scary message: that our principles are for sale."

What Chips Are Involved?

• The deal includes:
• Nvidia’s H20 chip, previously banned, now allowed back into the Chinese market.
• A scaled-down version of the upcoming "Blackwell" chip—offered to China at reduced performance (about 30–50% below the original).
• AMD may also be part of the agreement, though details vary.

In essence, even non-cutting-edge versions of these chips pose concerns if China builds large-scale AI systems. The Commerce Department has already started issuing export licenses.

Is This Legal?
Experts worry the deal could be unconstitutional. The U.S. Constitution bans export taxes, and this “15% requirement” looks an awful lot like exactly that. Professor Kyle Handley remarked, “They can call it anything—still feels like the government skimming profits.”

Legal scholars suggest this kind of deal has never been part of U.S. policy. It represents a new, transactional approach where national security decisions are linked to revenue, not principle.

Risks to Security and Business
This deal opens the door to troubling questions. If paying a fee unlocks export licenses, what’s stopping future administrations from demanding similar cuts from other tech or defense companies? Critics say this sets a dangerous precedent.

Financial analysts agree. The 15% “cut” may reduce chipmakers’ gross margins by 5 to 15 points, potentially shaving off a full percentage point from their overall profits. Some companies might accept the loss to keep their market access.

Some industry insiders also see the deal as a possible lifeline. As one fund manager put it, “For sellers of strategic products, remittance could be a burden—or the only way to stay in the market.”

Criticism from All Sides
Journalists and experts warn the deal weakens a consistent national security strategy. BreakingView noted that the extra revenue (perhaps $3 billion annually) hardly offsets the broader damage to security credibility or economic clarity.

A Washington Post editorial pointed to deeper problems: the deal blurs the line between national policy and corporate coercion. It creates a system where companies must make political deals to stay competitive, undermining market fairness.

Trump’s Defense
President Trump defended his move as practical and smart. He called the H20 chip “obsolete” and said China already had it. He joked about negotiating a 20% cut before settling on 15%. Some see the deal as a result of broader negotiations—possibly tied to rare earth exports or other trade talks.

He argued that allowing some chip access served U.S. interests while keeping technological control. Indeed, U.S. officials noted that China was already widely using the H20 chip.

Still, this marks a clear departure from earlier, strict export control rules.

Global Implications
This arrangement may weaken the United States’ standing with allies on export policy. In the past, Washington based decisions on objective security risks. Now, if licensing can be bought, foreign partners might question Washington’s basis for restrictions.

China, meanwhile, can claim this deal as proof of success—though its leaders have called U.S. tech restrictions unfair and coercive.

Some experts say that allowing even downgraded chips may help China scale its AI systems. Former national security officials warn that China could leap ahead in AI even without top-tier chips if it buys enough of them.

Are There Broader Ramifications?
Many expect this approach to resurface. It’s possible similar arrangements will be used in questions of foreign investment, licensing, or market access.

This move signals a new era where profit and security are intertwined—and corporations may find themselves navigating political bargains as much as market competition.

President Trump’s agreement with Nvidia and AMD marks a turning point. For the first time, U.S. national security policy feels negotiable—if a company pays enough.

While the deal benefits these tech giants and opens revenue sources, it also sets a troubling tone. It replaces steadfast principles with transactional terms—and raises big questions about the future of export policy, corporate autonomy, and national safety.

Only time will tell if this is a one-time exception or the start of a new norm in U.S. dealings with big corporations.