President Trump's surprise decision to let Nvidia sell advanced AI chips to China is sparking a rare bipartisan revolt on Capitol Hill. The deal would allow H200 chip sales in exchange for 25% of revenue flowing to the U.S. government, but Republicans warn it hands Beijing critical AI advantages that could undermine American security.
The political earthquake started with a Truth Social post Monday evening. President Trump announced that Chinese President Xi Jinping had "responded positively" to letting Nvidia sell H200 artificial intelligence chips to China, with the U.S. government taking a 25% cut of sales revenue.
But the deal is already fracturing Trump's own party. "Alarm bells go off in my head here," Sen. Lindsey Graham told CNBC on Tuesday. "If you can prove to me this will accelerate their military capability, I'll oppose it."
The pushback reveals how AI chips have become the new oil of geopolitics. The H200 processors aren't Nvidia's most cutting-edge - that would be the B200s powering the latest ChatGPT models - but they're significantly more powerful than the H20 chips previously approved for China. Where H20s were essentially hobbled versions designed specifically for the Chinese market, H200s pack serious compute power that could supercharge Beijing's AI ambitions.
"China's progress on AI is almost entirely parasitic on our technology, in particular on our hardware," Sen. Josh Hawley told reporters on Capitol Hill. "If we want to beat China, I think we need to constrain their ability to leverage our own technology."
The timing couldn't be more awkward. Just days before Trump's announcement, his own Department of Justice touted a crackdown on a "major China-linked AI tech smuggling network" trying to get exactly these kinds of chips. Sen. Elizabeth Warren didn't miss the irony, posting on X that "Trump is letting NVIDIA export cutting-edge AI chips that his own DOJ revealed are being illegally smuggled into China."
The policy represents a dramatic shift from the Biden administration's approach. Over the summer, the White House approved Nvidia and AMD sales of less powerful chips to China for just 15% of revenue. Beijing apparently wasn't interested - reports suggested Chinese officials told companies not to buy those chips.
