U.S. President Trump has agreed to allow Nvidia to export H20 chips to China in exchange for 15% of sales paid to the government, and he has publicly called for Intel CEO Pat Gelsinger to step down; according to the New York Times, there has never been a case in U.S. economic history where businesses had to pay the government for an export license. Trump has become the global chip industry's commander-in-chief.
The Republican Party has traditionally opposed government intervention in business operations, believing in free-market capitalism, but President Trump has recently taken the opposite approach.
Trump reached an agreement with Nvidia CEO Jensen Huang, allowing Nvidia to export H20 AI chips to China, but requiring that 15% of sales be paid to the federal government. Trump believes Intel CEO Pat Gelsinger is too close to China and publicly called for his resignation; after the two met, his attitude softened.
The New York Times, citing opinions of U.S. economic historians, reported that this is the most significant federal intervention in the American economy since President Obama rescued the too-big-to-fail banks and the automobile industry during the 2009 Wall Street financial crisis—but lacks justification.
There is no precedent for U.S. businesses to pay the government for permission to export. The Department of Commerce has yet to respond on how this payment would be collected and used. UC Berkeley economics professor Harrison said this is not a rational industrial policy, but rather government intervention in management. "Trump is threatening that if companies do not agree, they will be penalized; he is interfering too much."
Recently, Trump has frequently interacted with executives from the chip technology industry, meeting at the White House with Jensen Huang, Pat Gelsinger, and Apple CEO Tim Cook. After the meetings, businesses increased investment, chipmakers set up plants in the U.S., and foreign chip imports could be exempted from 100% import tariffs.
Rand Corporation senior analyst Goodrich said that with Trump leading the (chip industry), companies are unclear when they might need to change their operations plans under pressure. Aside from pledging financial support and lavish "gifts" to get the president's approval, companies have few choices.
Goodrich pointed out that Trump's opportunistic style has made market conditions feel like a roller coaster—no one knows where things are headed.