Introduction
When it comes to Donald Trump and trade policy, surprises are the norm. Over the years, the former real estate mogul turned president has reshaped U.S. A style of economic policymaking driven by risk-taking and nontraditional methods that fuse politics with business deals. His latest decision—allowing Nvidia and AMD to sell certain artificial intelligence chips to China in exchange for a share of their revenues—has stunned both policymakers and industry leaders.
On the surface, it looks like just another Trumpian negotiation tactic. But experts warn it could establish a “dangerous precedent”, signaling to the world that U.S. export controls are negotiable if companies are willing to pay.
This blog dives deep into the details of the new arrangement, its legal ambiguities, the stakes in the AI arms race, and the broader implications for global trade.
Apple’s Gift and Trump’s Tariff Politics
Earlier this month, Apple CEO Tim Cook paid a visit to the White House. Instead of arriving empty-handed, Cook brought a symbolic gift: a glass plaque, neatly boxed, with a 24-karat gold base crafted in Utah. More than just a gesture of goodwill, the gift symbolized Apple’s ties to U.S. manufacturing.
That same day, Apple announced a $100 billion investment in American production facilities. For Trump, the timing was impeccable. He had just confirmed that Apple would not face the new round of tariffs on imported computer chips.
For analysts, the moment was classic Trump: using personalized negotiations to shape major trade outcomes. Unlike traditional policymakers, who rely on legal frameworks and long-term strategies, Trump approaches trade much like a real estate deal—leveraging relationships, making grand bargains, and positioning himself as the ultimate broker.
Nvidia, AMD, and the Shift on AI Chips
Just two days after Cook’s visit, Nvidia CEO Jensen Huang also met privately with Trump. What followed was a bombshell announcement: Nvidia and AMD would be permitted to export certain AI chips to China, provided they surrender 15% of the revenue from those sales to the U.S. government.
This was a dramatic reversal. In contrast, the current strategy replaces a sweeping ban with an experimental revenue-sharing system.
Trump himself explained the negotiation in his trademark style: “I wanted 20%, they said 15%, so we made a deal—for the country.”
Why This Matters: The AI Arms Race
At the heart of this controversy is the global race for dominance in artificial intelligence. Nvidia, now valued at over $4 trillion, produces the chips essential for AI development. Restricting access to such chips has been a key pillar of U.S. strategy to maintain a technological edge over China.
The logic is straightforward: AI progress depends heavily on computing power. If China has fewer advanced chips, its researchers and companies will be slower in building cutting-edge AI systems. Yet despite years of restrictions, China has made rapid strides, with its top models now only months behind America’s best.
What Nvidia and AMD are permitted to sell here does not include their flagship chips. They can run trained models (inference) but are not powerful enough to train entirely new ones. Still, experts argue even older chips provide strategic advantages. For hawks in Washington, the idea of handing over any AI-enabling technology to China is unacceptable.
A “Revenue-Sharing” Agreement or Export Tax?
The Trump administration has branded the arrangement as a “revenue-sharing” agreement, not a tax. Companies exporting AI chips to China would essentially pay the U.S. Treasury a portion of their earnings as the price of market access.
But legal scholars see potential problems. Export taxes are prohibited under the U.S. Constitution, and critics argue that the deal amounts to just that. The Department of Commerce has yet to finalize its legal justification, leaving the policy in limbo.
For trade analysts, this opens a troubling possibility: if export restrictions can be sidestepped by money, what stops other companies from lobbying for similar arrangements?
The Dangerous Precedent
Senior fellow Martin Chorzempa of the Peterson Institute for International Economics characterized the deal as a “dangerous precedent.” Export controls are traditionally justified on grounds of national security, not profit. Allowing companies to “buy” exceptions risks undermining U.S. credibility in global trade and encouraging lobbying wars over sensitive technologies.
Republican Congressman John Moolenaar warned: “Export controls act as our first defense against national security threats. Allowing financial incentives to influence licensing would set a harmful precedent.”
Others, like UCLA’s Julia Powles, see deeper risks. By treating the government like a transactional operator, she warns, such deals threaten the norms of privacy, security, and institutional integrity that underpin U.S. governance.
Expanding the Model to Other Industries
Despite the backlash, the White House is testing whether this arrangement can be expanded. Treasury Secretary Scott Bessent praised it as innovative, calling it a “beta test” for future trade models. If it works with AI chips, could similar revenue-sharing deals be applied to pharmaceuticals, steel, or green technologies?
For some, this represents a creative way to boost U.S. revenue while maintaining leverage over global markets.For opponents, it signals a troubling shift toward monetizing national security safeguards.
Why Trump Prefers Deals Over Doctrine
Trump’s approach reflects his core philosophy: treat global trade as a set of deals rather than rigid frameworks. While past administrations relied on international agreements and multilateral cooperation, Trump prefers direct negotiation with corporate leaders.
From his perspective, this deal achieves three goals at once:
It ensures U.S. companies profit from the Chinese market.
It funnels a share of that profit back into the American treasury.
It portrays Trump as the ultimate negotiator—a leader who can strike bargains that others cannot.
Yet in doing so, critics argue, he risks destabilizing decades of carefully built trade policy.
China’s Perspective
Beijing has not officially commented, but analysts believe China views the arrangement as a partial victory. Access to any U.S.-made AI chips—even older ones—helps Chinese companies compete globally. Moreover, the deal signals that U.S. restrictions are not absolute; they can be bargained with.
This perception could embolden Chinese firms to lobby for more access, while simultaneously investing in homegrown chip technologies to reduce dependence on the U.S.
Market and Industry Reactions
On Wall Street, the announcement generated mixed reactions. Markets reacted with a temporary lift in Nvidia shares, fueled by hopes of re-engaging with China. However, some analysts warned that tying export rights to government revenue-sharing introduces uncertainty, making future profits less predictable.
U.S. retailers and manufacturers are also watching closely. If the government can demand revenue shares from chip exports, could similar expectations extend to other sectors?
Legal Hurdles Ahead
The legal challenges to this model are significant. Export taxes are explicitly restricted under Article I of the U.S. Constitution. If challenged in court, the revenue-sharing framework may collapse, forcing the administration back to traditional controls.
This uncertainty explains why the policy, though announced, has not yet been fully implemented. Until the Commerce Department finalizes its legal arguments, the deal remains suspended in a gray area.
Broader Implications for U.S. Policy
At its core, this experiment reveals a deeper dilemma: how should the U.S. balance its economic interests with national security concerns in the era of AI?
Hardliners argue for blanket bans on all exports to China, fearing even minor concessions could aid Beijing’s rise.
Pragmatists believe some trade is inevitable and prefer conditional frameworks that extract value for the U.S.
Instead of outright prohibitions, Trump’s team aims to profit from restrictions by converting them into revenue
This debate will shape not only AI policy but the future of global trade norms.
Conclusion
Donald Trump’s decision to tie AI chip exports to revenue-sharing payments is one of his most controversial trade moves yet. On paper, it looks like a clever compromise: companies gain market access, the U.S. treasury collects revenue, and China only receives older technology.
But beneath the surface, it risks creating a precedent that could commercialize national security policy, destabilize global trade relations, and weaken America’s moral authority in setting rules for emerging technologies.
As the legal and political battles unfold, one question looms large: is the U.S. safeguarding its technological edge—or auctioning it off to the highest bidder?