President Donald Trump announced on Monday that an agreement had been reached with President Xi Jinping to permit US chip giant Nvidia to export advanced artificial intelligence chips to China. This move marked a significant departure from the previous US export policy on advanced AI chips, which had been tightly restricted by the Biden administration due to national security worries regarding potential Chinese military applications.
Democrats in Congress swiftly criticized the decision, labeling it a major misstep that could bolster the Chinese military and economy. Trump, posting on his Truth Social platform, disclosed that Washington would authorize Nvidia to deliver its H200 products to “approved customers in China, and other countries, under conditions ensuring continued strong National Security.” President Xi reportedly responded favorably to the announcement, with Trump mentioning a 25% payment to the United States, albeit without elaborating on the payment process.
Trump expressed disapproval of his predecessor’s approach, asserting that it had compelled American companies to invest billions in producing “degraded” products that lacked consumer demand, slowing innovation and harming American workers. This criticism referred to the Biden administration’s requirement for chip firms to develop modified, less potent versions tailored specifically for the Chinese market, complying with export control regulations.
While Chinese foreign ministry spokesman Guo Jiakun did not explicitly confirm the agreement, he emphasized China’s stance on promoting mutually beneficial cooperation with the United States. Under the previous restrictions imposed during the Biden administration, advanced chips like the H200 were prohibited from being exported to China.
Nvidia welcomed Trump’s decision, stating that it would enable American chip companies to compete, supporting high-paying jobs and manufacturing within the country. The company noted that offering the H200 to pre-approved commercial clients vetted by the Department of Commerce struck a favorable balance for the United States.
Trump underscored that Nvidia’s most cutting-edge chips, such as the Blackwell series and upcoming Rubin processors, were excluded from the agreement and would remain solely accessible to US customers. The H200 chips lagged approximately 18 months behind the company’s latest offerings and were primarily utilized for training AI models crucial to the generative AI evolution initiated by the ChatGPT release in 2022.
The Commerce Department is currently finalizing the implementation details, with Trump indicating that a similar approach would be adopted for AMD, Intel, and other major American companies. The announcement coincided with heightened competition between Washington and Beijing in the artificial intelligence technology sector.
Nvidia CEO Jensen Huang had vigorously advocated for the reversal of the Biden-era policy at the White House, despite facing significant opposition in Washington against granting Chinese companies access to potent chips. Massachusetts Senator Elizabeth Warren, a Democrat, attributed the agreement to a closed-door meeting between Trump and Huang, along with Huang’s company’s donation for constructing the East Wing ballroom at the White House.
Trump’s decision was met with criticism from senior Democrats in the Senate, who labeled it as a significant economic and national security blunder. They contended that providing China access to these chips could equip its military with transformative technology, enhancing capabilities to conduct cyberattacks and bolstering economic and manufacturing sectors.
On the same day as Trump’s announcement, the US Justice Department revealed the arrests of two Chinese businessmen linked to an alleged scheme to smuggle Nvidia H100 and H200 chips from the US to China. It remains uncertain how the agreement will affect this case.
Alex Stapp from the Washington-based Institute for Progress condemned the policy as a “massive own goal,” emphasizing that the H200 was significantly more powerful than the previously export-approved H20 chip. Meanwhile, Zhang Yi, founder of Chinese tech research firm iiMedia, suggested that having Nvidia AI GPUs available on the market was improbable to deter Beijing’s efforts to develop its own advanced chips but could accelerate those efforts due to increased costs from the 25% US charge and existing supply chain security concerns among Chinese companies.