War of the American-China chip: how Trump’s NVIDIA-AMD agreement redefined the Washington export control policy

The Trump administration already positions the agreement as a game book for other products and industries. “Now that we have the model and the beta test, why not develop it?” On Wednesday, the American Treasury Secretary Scott Bessent, told Bloomberg TV.

Trump’s movement reflects Washington’s difficult position in its technological rivalry with Beijing. The head of the United States is on China in AI and semiconductors decreases, the experts estimating an advance of only one to two years at most. Meanwhile, American companies complain of being excluded from the second world economy. And now China adopts American tactics of export controls, using its richness of rare land metals – key materials used in a range of electronic products – to exert pressure on Washington and its allies.

Analysts who have spoken Fortune Consider Trump’s NVIDIA Agreement as a occasional measure resulting from the president’s trade negotiations with China.

Ray Wang, a semiconductor researcher from the Futurum group, underlines that the Trump administration has reported for the first time that it would deliver export licenses for the H20 processor of NVIDIA – an AI chip designed to comply with American rules – in late July, as part of its trade war with Beijing. Wang suggests that the drop in government by 15%, agreed during the weekend, is an additional module, an “opportunity to generate government revenues”, in accordance with the wider objectives of Trump.

But damage to the export control regime may have already been made, explains Jennifer Lind, an associate professor at the University of Dartmouth and expert in international relations. “This agreement suggests that in the Trump administration, what is prohibited or authorized is not trained by meticulous calculations on the effect on Chinese military power, but rather on political whim and personalist policy,” explains Lind. “This is ruinous for a functional export control regime.”

How have export controls changed?

Trump confirmed on Monday that the media reports that Nvidia and AMD had agreed to give 15% of their sales in China to the US government in exchange for export licenses. The chips in question are the H20 of Nvidia and the MI308 of AMD, two AI processors designed for the Chinese market and adapted to previous American export controls.

In the same press conference, Trump suggested that he could even let Nvidia sell a watered -down version of his main Blackwell processor in China.

Export controls have changed madly in recent months. In April, Nvidia revealed that the United States had prevented him from selling the H20 to China and that it was taking a fees of $ 5.5 billion in the invend inventory.

While Washington and Beijing increased their trade war, export controls have accelerated. At the end of May, the United States had expanded controls to block the sale of flea design and plane parts, among other products and chemicals, in China.

Then, almost as quickly as they were imposed, these export controls disappeared. As part of its commercial negotiations with China, the United States has agreed to develop controls on flea design software and plane parts.

Managers argue that these agreements are necessary to bring China to loosen its own controls on rare earth magnets, which threaten several American industries such as cars and defense.

Some legislators were concerned about the growing technological domination of China, fear that Trump’s agreement is a bad precedent. John Moolenar, a republican who chairs the China selective committee on China, argued that “we should not establish a precedent that encourages the government to grant licenses to sell Chinese technology that will improve its AI.”

His Democratic counterpart, Raja Krishnamoorthi, suggested that “by putting a price on our security problems, we point out to China and our allies that US national security principles are negotiable for the right costs.”

The counterposer to the agreement could prevent a new erosion of the export regime, explains Chris Miller, author of Chip War: The most critical technology fight in the world. “We are going to see a decline against the H20 decision in the United States of Congress, the Media and the Bureaucracy, which will probably also discourage another weakening of the controls,” explains Miller.

Have the chip commands work?

Biden administration has supervised export controls as a national security measure, designed to maintain and extend the technological advantage of the United States compared to China.

The Trump administration has used similar reasoning in the past. But now, he seems to treat commands of chips as tools for economic realization, raising questions about what could happen.

“There is no real leadership on this question with the White House now, as there were in the Biden era,” said Paul Triolo, partner of the DGA-Albright Stonebridge Group, during the Fortune Brainstorm Ai Singapore conference in mid-July, after the first announcement that Trump will allow the H20 in China again. “We are in a little strange moment.”

It is not clear, however, how effective export controls have been in the development of technology in China. The country’s technological sector, despite export controls, seems to have developed satisfactory processors and powerful AI models. Huawei, the Chinese technology giant, works with the SMIC master’s giant to do its own AI processors. The Huawei Ascend Flea is still lagging behind the most advanced products in Nvidia, but compares favorably to Nvidia chips sold in China.

This momentum places the United States in a difficult position. It could double controls in the hope of retaining Chinese innovation in the short term – even if, in the long term, the national China industry becomes self -sufficient. Or it can soften its borders, keep market access and hope that China will never invest in interior alternatives.

It seems that US officials now believe that it is preferable for Nvidia to continue selling in China. “You want to sell the Chinese enough for their developers to become dependent on the American technological pile,” said US Secretary for Commerce Howard Luxeurick on CNBC in mid-July, shortly after reports that Nvidia would be authorized to sell the H20 in China again. (Lutnick also rejected the H20 as a chip for the “fourth best” of Nvidia.)

“What we don’t want is that Huawei has a digital belt and road,” said Bessent on Wednesday, referring to China’s strategy to build infrastructure in emerging markets around the world. “We don’t want the norm to become Chinese.”

China pushes

Chinese pressure has probably played a role in bringing Trump to leave Nvidia and Amd Chips to China.

While China had slowly started to limit exports of rare land in recent years, Beijing has stopped exports entirely within the framework of its reprisal measures at Trump prices earlier this year. Officials demanded that Chinese exporters ask for licenses before selling customers abroad. The suspension froze industries in the United States and Europe.

China is the source of around 90% of the rare earths in the world, thanks to a project of several years to invest in internal treatment. Governments are starting to invest in non -Chinese sources, but he can take years for these projects to materialize.

After winning Washington, Nvidia and CEO Jensen Huang should now win in Beijing. Chinese officials have warned companies working in government -related areas against the use of Nvidia fries, Bloomberg reported on Tuesday.

Chinese state media also continued the H20. “When a type of chip is neither environmentally friendly, advanced nor safe, as consumers, we certainly have the opportunity not to buy it,” a WeChat affiliated to video surveillance on Sunday.

And after Michael Kratsios, one of the United States’s tracks on AI policy, suggested that Nvidia fleas could contain a “location monitoring” to combat the smuggling of fleas, Chinese regulators summoned Nvidia leaders to a meeting to explain whether the H20 fleas contained security risks.

The fury was sufficient to push Nvidia to affirm with force that “the NVIDIA GPUs did not and should not have switches and waste”.

Wang, the researcher of the Futurum group, underlines that the Chinese private sector – Big technological companies like Alibaba and Tencent and smaller startups like Moonshot – consume the vast majority of Nvidia tokens.

“They really need these tokens to train and develop their AI,” said Wang. “I do not believe that government directives will stop this behavior.”