The U.S. Department of Commerce seems poised to allow export of Nvidia’s cutting-edge H200 chips to China. This decision may profoundly change the nature of high-tech trade between the two countries. Such approval would be a welcome counter to an unprecedented string of licensing hurdles imposed by prior administrations on this project. Ironically, this was something that the Trump administration actually did—significantly curb chip exports to China—in April.
Exports of Nvidia’s latest H200 chips were placed under tight licensing requirements, with national security and technological competition, to again, China being a driving factor. During the Trump administration, these restrictions were a central factor in U.S.-China trade negotiations. In May, the Biden administration rescinded a diffusion rule that would have further regulated AI chip exports, creating an uncertain environment for companies like Nvidia.
Congress is not the only place abuzz with alarm over the imminent approval of the H200 chips. Lawmakers have raised specific concerns over potential national security implications. Senators Pete Ricketts and Chris Coons just introduced a bill that would prevent advanced AI chips from being exported to China for at least two years. This decision further demonstrates how hotly debated the topic is.
U.S. Commerce Secretary Howard Lutnick didn’t underestimate the road ahead. Beyond that, he said, the final decision on whether to permit the export of Nvidia’s H200 chips still rests with President Donald Trump. As discussions continue, it appears that Nvidia may soon be able to ship its advanced chips to select customers in China, provided they are vetted by the Department of Commerce.
In September, China’s Cyberspace Administration prohibited domestic companies from purchasing Nvidia’s chips. Now, as a consequence, these companies only have the advanced technology to lean on are – as Harvard BCG’s Tarun Khanna calls them – local behemoths like Alibaba and Huawei. This hasty move emphasized just how intense the competitive waters are with both countries submerged in a technological race for supremacy.
The U.S. government has indicated that companies could resume exporting chips to China, contingent on the government receiving a 15% cut of all revenue generated from these transactions. That proposed arrangement has led to huzzahs from Nvidia executives, who appeared hopeful that arrangement would gain approval.
“We applaud President Trump’s decision to allow America’s chip industry to compete to support high-paying jobs and manufacturing in America. Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America.” – Nvidia spokesperson
With trade talks shifting and the conversations around regulatory frameworks heating up, Nvidia’s H200 chips therefore sit directly at the intersection of economic opportunity and national security malaise. Hopefully, the conclusive nature of these negotiations will be a lasting benefit for not only U.S. tech companies but their Chinese competitors as well.