Trump Bid for Cut of Chip Revenue Risks ‘Dangerous World'
Sunseeking Germans Face Swiss Backlash Over Alpine Holiday Congestion
New York Warns of $34 Billion Budget Hole, Biggest Since 2009 Crisis
Three Deaths Reported as NYC Legionnaires' Outbreak Spreads
Chicago Schools' Bond Penalty Widens as $734 Million Gap Looms
A New Stage for the Theater That Gave America Shakespeare in the Park
Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay the US government 15% of revenue from some chip sales to China. The chips — Nvidia's H20 AI accelerator and AMD's MI308 chips — were earlier banned by the Trump administration and require export licenses to sell.
'To call this unusual or unprecedented would be a staggering understatement,' said Stephen Olson, a former US trade negotiator now with the Singapore-based ISEA — Yusof Ishak Institute. 'What we are seeing is in effect the monetization of US trade policy in which US companies must pay the US government for permission to export. If that's the case, we've entered into a new and dangerous world.'
The chip-payment arrangement may face legal challenges because it could be construed as an export tax, something that's not allowed under the constitution, trade experts said. The proposal is the latest direct government intervention into business and finance since Trump returned to the Oval Office in January. As well as a chaotic tariff campaign and persistent criticism of a sitting Federal Reserve chairman, Trump has used his Truth Social platform for everything from calling on CEOs to resign to offering commentary on corporate advertising campaigns.
Trump's transactional policy approach saw him approve the sale of United States Steel Corp. to Japan's Nippon Steel Corp. in a $14.1 billion deal that included caveats such as agreeing to US national security rules and a 'golden share' for the US government. Japan, South Korea and the European Union all pledged to invest billions in the US, helping secure tariff rates of 15%, while companies such as Apple Inc. have also skirted levies by promising to invest hundreds of billions of dollars.
The Nvidia and AMD revenue-sharing deals may now prompt the White House to target other industries and goods, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore.
'The sky is the limit,' she said. 'You could come up with all sorts of company-specific, country-specific combinations that would say, 'No one else can trade, but if you pay us directly, then you get the ability to trade.''
Although Nvidia and AMD agreed to the terms, there are questions about the legality of the agreement, Elms said. The arrangement looks like an export tax, which is forbidden by the US Constitution.
The Trump administration is already in the midst of a lawsuit related to his use of the International Emergency Economic Powers Act to levy what he called 'reciprocal' tariffs on the world. On Friday, Trump warned of a 'GREAT DEPRESSION' if US courts ruled that his tariffs were illegal.
Chips are at the heart of the US-China battle to dominate industries of the future such as AI and automation. The Biden administration restricted the sale of advanced chips to China, prompting Nvidia to develop the H20, which skirted such restrictions. Trump administration officials tightened export controls in April by barring Nvidia from selling the chips without a permit.
Last month, however, the White House decided to allow Nvidia and AMD to resume sales of chips designed specifically for the Chinese market, which are several rungs below the most advanced artificial intelligence accelerators. Commerce Secretary Howard Lutnick said the administration wanted Chinese developers 'addicted' to American technology.
China has grown increasingly hostile to the idea of Chinese firms deploying the H20, particularly after the US called for the chips to be installed with tracking technology to better enforce export controls. Yuyuantantian, a social media account affiliated with state-run China Central Television that regularly signals Beijing's thinking about trade, on Sunday slammed the chip's supposed security vulnerabilities and inefficiency.
Still, Chinese companies could use the H20s because domestic firms can't produce enough AI chips to meet demand. That potentially provides an opportunity for Nvidia and AMD to sell more — and now for the US government to earn additional revenue as well.
Trump has yet to extend a 90-day trade truce between the US and China, which is set to expire on Aug. 12. Lutnick said last week that the detente was 'likely' to continue as the world's biggest economies continue to engage in talks ahead of a possible meeting between Trump and Chinese President Xi Jinping later this year.
'There's clearly a shift by the administration to take a lighter national security stance as these negotiations are ongoing,' said Drew DeLong, lead in geopolitical dynamics practice at Kearney, a global strategy and management consulting firm.
China Draws Red Lines on US Chip Tracking With Nvidia Meeting
While the US has intervened before, including by taking stakes in private companies after the 2008 financial crisis, a similar deal like the one struck with Nvidia and AMD is hard to remember and — without proper oversight — could lead to a 'crony capitalism state,' according to Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington.
'It represents a huge shift in the way the American economy is supposed to operate,' Kennedy said. 'It won't make anyone happy except maybe the Chinese, who will get their chips and watch the US political system go through gyration and domestic tensions.'
(Updates to include reference to constitution in fourth paragraph.)
Why It's Actually a Good Time to Buy a House, According to a Zillow Economist
The Game Starts at 8. The Robbery Starts at 8:01
Klarna Cashed In on 'Buy Now, Pay Later.' Now It Wants to Be a Bank
The Pizza Oven Startup With a Plan to Own Every Piece of the Pie
Digital Nomads Are Transforming Medellín's Housing
©2025 Bloomberg L.P.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Times
a few seconds ago
- New York Times
The Reason Economists Are Worried About Trump's Labor Statistics Choices
How many commissioners of the Bureau of Labor Statistics can you name? For the vast majority of people (and even most economists) the answer would be zero. And for good reason. While several highly accomplished and effective people have served in that role over the years, it is fundamentally about making sure the plumbing of our data infrastructure is working. Most of us just accept that the data is the best possible estimate of the economy — just as we do not think much about where our water comes from, we simply drink it — and instead argue about much harder and less objective questions, like whether inflation is transitory or job growth is trending toward recession. Unfortunately, that could change if the Senate confirms President Trump's pick, E.J. Antoni, to be the next B.L.S. commissioner. When Mr. Trump abruptly fired the B.L.S. commissioner after negative jobs number revisions earlier this month, he wrote on social media that he would find someone 'much more competent and qualified' for the post. He is proposing replacing Erika McEntarfer, a highly respected economist with decades of experience working at the U.S. Census Bureau and elsewhere, with a partisan favored for the job by Steve Bannon. Mr. Antoni's posts that have shown apparent misunderstandings of import prices and the baby boom retirement have gotten the most attention and criticism, along with his statement before the nomination that the monthly jobs report should be suspended. But even more egregious, as Alan Cole, an economist the right-leaning Tax Foundation, has pointed out, is that in October 2024 Mr. Antoni took the time to publish a report that purported to find that 'the American economy has actually been in recession since 2022.' This claim was based on a concept of 'adjusted real' disposable income, which was down about 2 percent from 2019 to 2024 — in contrast to the official data, which showed real disposable income up 12 percent over this period. The problem was his measure effectively double-counted housing inflation, making the inflation rate artificially higher and growth artificially lower. Mr. Antoni's selection has done something I have rarely seen, which is to unite a number of economists and policy wonks from across the political spectrum. The American Enterprise Institute's Stan Veuger told The Washington Post that 'he is utterly unqualified and as partisan as it gets.' Similar sentiments were echoed by people affiliated with conservative and libertarian think tanks, in a Wall Street Journal editorial and a National Review article. Want all of The Times? Subscribe.
CBS News
a few seconds ago
- CBS News
Appeals court allows Trump administration to cut billions in foreign aid
Washington — A divided panel of appeals court judges ruled Wednesday that the Trump administration can suspend or terminate billions of dollars of congressionally appropriated funding for foreign aid. Two of three judges from the U.S. Court of Appeals for the District of Columbia Circuit concluded that grant recipients challenging the freeze did not meet the requirements for a preliminary injunction that restored the flow of money. In January, on the first day of his second term in the White House, President Trump issued an executive order directing the State Department and the U.S. Agency for International Development to freeze spending on foreign aid. After groups of grant recipients sued to challenge that order, U.S. District Judge Amir Ali ordered the administration to release the full amount of foreign assistance that Congress had appropriated for the 2024 budget year. The appeal court's majority partially vacated Ali's order. Judges Karen LeCraft Henderson and Gregory Katsas concluded that the plaintiffs did not have a valid legal basis for the court to hear their claims. The ruling was not on the merits of whether the government unconstitutionally infringed on Congress' spending powers. "The parties also dispute the scope of the district court's remedy but we need not resolve it ... because the grantees have failed to satisfy the requirements for a preliminary injunction in any event," Henderson wrote. Judge Florence Pan, who dissented, said the Supreme Court has held "in no uncertain terms" that the president does not have the authority to disobey laws for policy reasons. "Yet that is what the majority enables today," Pan wrote. "The majority opinion thus misconstrues the separation-of-powers claim brought by the grantees, misapplies precedent, and allows Executive Branch officials to evade judicial review of constitutionally impermissible actions." The money at issue includes nearly $4 billion for USAID to spend on global health programs and more than $6 billion for HIV and AIDS programs. Mr. Trump has portrayed the foreign aid as wasteful spending that does not align with his foreign policy goals. Henderson was nominated to the court by Republican President George H.W. Bush. Katsas was nominated by Trump. Pan was nominated by Democratic President Joe Biden.
Associated Press
a few seconds ago
- Associated Press
Mexico says 26 capos extradited to US were requested by Trump administration
MEXICO CITY (AP) — Mexico sent 26 alleged cartel figures to face justice in the United States because the Trump administration requested them and Mexico did not want them to continue running their illicit businesses from Mexican prisons, officials said Wednesday. The mass transfer was not, however, part of wider negotiations as Mexico seeks to avoid higher tariffs threatened by U.S. President Donald Trump, they said. 'These transfers are not only a strategic measure to ensure public safety, but also reflect a firm determination to prevent these criminals from continuing to operate from within prisons and to break up their networks of influence,' Mexican Security Minister Omar García Harfuch said in a news conference on Wednesday. The 26 prisoners handed over to American authorities on Tuesday included figures aligned with the Jalisco New Generation Cartel and the Sinaloa Cartel among others. They were wanted by American authorities for their roles in drug trafficking and other crimes. It comes months after 29 other cartel leaders were sent to the U.S. in February. In the exchange, the U.S. Justice Department promised it would not seek the death penalty against any of the 55 people included in the two transfers, which experts say may help avoid any violent outburst by the cartels in response. Authorities said the operation involved nearly a thousand law enforcement officers, 90 vehicles and a dozen military aircraft. Mexico President Claudia Sheinbaum said earlier Wednesday that the transfers were 'sovereign decisions,' but the move comes as the Mexican leader faces mounting pressure by the Trump administration to crack down on cartels and fentanyl production. García Harfuch also confirmed Wednesday that a U.S. government drone — non-military — was flying over central Mexico, but at the request of Mexican authorities as part of an ongoing investigation. So far, Sheinbaum has tried to show the Trump administration a greater willingness to pursue the cartels than her predecessor — a change that has been acknowledged by U.S. officials — and continued to slow migration to the U.S. border, in an effort to avoid the worst of Trump's tariff threats. Two weeks ago, the two leaders spoke and agreed to give their teams another 90 days to negotiate to avoid threatened 30% tariffs on imports from Mexico. 'Little by little, Mexico is following through with this demand by the Americans to deliver drug capos,' said Mexican security analyst David Saucedo. 'It's buying (the Mexican government) time.' Saucedo said the Mexican government has been able to avoid a burst of violence by cartels – a reaction often seen when capos are captured – in part, because Ovidio Guzmán, a son of infamous capo Joaquín 'El Chapo' Guzmán, showed it's possible to negotiate with U.S. prosecutors. Ovidio Guzmán pleaded guilty last month to drug trafficking and other charges and hopes for a lighter sentence in exchange for his cooperation. But Saucedo warned that if such mass prisoner transfers continue, the Latin American country is bound to see another outburst of violence in the future.
