Scoop: Lutnick stalled Trump's Nvidia–China chip curbs after Oval talks
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Commerce Secretary Howard Lutnick has resisted efforts by other Trump administration officials to restrict companies suspected of diverting Nvidia AI chips to China, sources tell Axios. Photo: Bonnie Cash/UPI/Bloomberg via Getty Images
President Trump on Thursday authorized a crack down on companies suspected of diverting Nvidia's advanced AI chips to China for the third time this year — even consulting Elon Musk before giving the go-ahead.
- One administration official has repeatedly stood in the way: Commerce Secretary Howard Lutnick.
Why it matters: This standoff illustrates a breakdown in efforts to keep American technology out of China's hands as the world wonders why the Trump administration has not taken action against the company at the center of suspected chip smuggling — and an espionage scandal.
- This report was assembled from interviews with six high-level sources who were briefed on or, in some cases, heard the discussions.
Inside the room: On Thursday, as the spy scandal rocked the administration, Lutnick met in the Situation Room with Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, U.S. Trade Representative Jamieson Greer and National Security Adviser and Secretary of State Marco Rubio.
- During the meeting, Bessent confronted Lutnick about why his department has resisted implementing the export controls, particularly on Megaspeed, the company at the center of the spy scandal. The group sided with Bessent.
- Lutnick appeared to agree, but then muttered under his breath, "I need to check with the president."
Friction point: Lutnick's seemingly innocuous comment raised concerns, the sources said, because officials have repeatedly believed the Commerce Department would impose the export controls, only to have nothing happen.
- "He's stalling it out," said one official, describing how Lutnick had previously met privately with the president to change his mind about the export limit.
- "This is an ongoing concern with Howard and this issue," said another.
This time, one person in the room called his bluff by saying: "Great. Why don't we do it today?"
- Around 5pm, the group headed to the Oval Office.
- Trump called tech advisor Elon Musk and agreed to move forward. Musk supported Rubio, Bessent, Greer and Hegseth's case to impose the controls while Lutnick warned it "will start a trade war with China."
- "Everyone argued back that China is already doing to us what Lutnick warned would happen," a source said.
Behind the scenes: With Lutnick the lone holdout, Trump made his decision: "Let's get it done." But once everyone was outside of the Oval Office, Lutnick proposed a new delay tactic.
- "I'll develop some options and come back," he said.
- "Everyone was like: 'No, no, the decision's been made. Go fucking execute,'" one source said. "Well, it still hasn't happened."
The other side: Commerce Department spokesperson Kristen Eichamer denied that Bessent confronted Lutnick and would not immediately comment on the other allegations.
Flashback: On at least three separate occasions — in May, August, and Nov. 5 — Trump approved taking action against suspected diversions of Nvidia chips to China.
- But Lutnick and Commerce Undersecretary Jeffrey Kessler resisted pressure from Bessent and others to move forward.
- In May, a highly classified memo warning about Jensen Huang's relationship with Alice Huang, a Megaspeed employee suspected by U.S. intelligence of being a Chinese agent, was shared with the president and other officials.
- In a subsequent meeting, Bessent, Director of National Intelligence Jay Clayton, Hegseth and White House officials pressed Lutnick and Kessler to act, the source said, "and they were refusing."
Catch up quick: The Trump administration last year announced it would loosen export controls on Nvidia H200 chip sales to China — something Nvidia has lobbied hard for.
- Trump has taken a more lax approach to export controls on China, agreeing to allow sales of Nvidia's H200 chips, which are older but still powerful, in exchange for a 25% tariff.
- Long before the affair with Alice Huang, Jensen Huang has pushed for tapping into the Chinese market.
- The CEO at the center of an AI boom Trump is dead set on winning has largely been successful at convincing Trump and Lutnick that selling less powerful chips to China is good for national security because it prevents China from developing its own alternatives and keeps the adversary dependent on the U.S.
The bottom line: While Lutnick oversees the department squarely at the center of export control policy, Trump is the ultimate decider.
