Trump's AI Chip Deal Could Open China Market to Downgraded Blackwell
The deal includes Nvidia's H20 chip and AMD's MI308, both intentionally downgraded for export. However, the Trump administration is considering extending this arrangement to Nvidia's more advanced Blackwell chips, albeit in a scaled-down form. Even with a 30%–50% performance reduction, these chips would still outperform China's domestic alternatives, potentially giving Nvidia and AMD a competitive edge in the Chinese market.
Chinese authorities have responded cautiously to the deal. The Cyberspace Administration of China has cautioned major domestic tech firms, including Tencent, ByteDance, and Baidu, over their purchases of Nvidia's H20 AI chips, expressing concerns about national security and data privacy. The government has advised against using these chips in government-related projects and, in some cases, ordered a suspension of purchases.
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Despite these concerns, demand for the chips remains high due to their superior performance. Nvidia has emphasized that the H20 is not a military or government-focused product, noting that China does not rely on U. S. chips for official uses. The company is also preparing to launch a new artificial intelligence chip for the Chinese market at a significantly reduced price compared to its previously restricted H20 model. The upcoming GPU, part of Nvidia's latest Blackwell-architecture AI chips, is expected to cost between $6,500 and $8,000, making it substantially lower than the H20's price tag of $10,000 to $12,000.
The Trump administration's decision to allow the sale of these downgraded chips represents a significant shift from the previous administration's approach to semiconductor exports. While the move has been welcomed by Nvidia and AMD, it has raised concerns among some lawmakers and analysts about the potential erosion of national security safeguards and the risks of enabling Chinese progress in AI.
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Ostensibly punishment for India's purchases of Russian oil, the measure has placed India in the same punitive bracket as Brazil and well above China's 30% rate — despite Beijing importing far more Russian crude. The tariff hikes, effective August 27, hit India's strongest export sectors where competitive margins are already slim: Knitted apparel ($2.7B, 63.9% total tariff) and woven apparel ($2.7B, 60.3% duty) are effectively priced out against Bangladesh and Vietnam. Home textiles ($3B, 59% duty) could see Pakistan capture long-term contracts. Jewellery and diamonds ($10B, 52.1% duty) face survival challenges. Shrimps ($2B) will be decimated by the combined blow of 50% duty and anti-dumping measures. Organic chemicals, carpets, and machinery — over $10B combined — will lose ground to lower-tariff suppliers like Ireland, Turkey, and Mexico. This isn't a tariff adjustment. 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Modi's August 15 speech offers him a unique tactical advantage: the chance to declare his negotiating red lines in full public view, on a platform that carries moral and political weight. If he wastes it on platitudes and avoids the specifics, he will walk into New York on the defensive, with the U.S. defining the terms. The stakes are clear. Trump's 50% tariff is not a policy dispute; it's a bargaining chip to prise open India's most politically sensitive sectors. The only question now is whether Modi will call it out — and lock his position in stone — before stepping into the UNGA arena. If he fails to do so, the fate of India's farmers may well be decided not in the fields of Gujarat or Punjab, but in a backroom at the United Nations. And the Red Fort will have been a missed chance to defend them before the fight even began. (IPA Service)
