President Trump's surprise deal to let Nvidia sell advanced H200 AI chips to China in exchange for 25% revenue share is meeting fierce resistance from his own party. The proposal, which Chinese President Xi Jinping reportedly endorsed, has GOP senators warning it could accelerate China's military AI capabilities and hand Beijing a critical advantage in the global tech race.
The political firestorm erupted hours after Trump announced the H200 chip export agreement via Truth Social Monday evening. The deal represents a major shift from previous export controls that limited China to Nvidia's less capable H20 chips, which were specifically designed for the Chinese market after earlier restrictions.
"Alarm bells go off in my head here," Sen. Lindsey Graham told CNBC Tuesday. "I don't mind doing normal business with China. But if you can prove to me this will accelerate their military capability, I'll oppose it." The South Carolina Republican's reaction signals broader GOP unease with what many view as a transactional approach to national security.
Sen. Josh Hawley of Missouri was even more direct, arguing that "China's progress on AI is almost entirely parasitic on our technology, in particular on our hardware." He told reporters on Capitol Hill that constraining Chinese access to American semiconductors should be the priority, not expanding it. "If we want to beat China, I think we need to constrain their ability to leverage our own technology," Hawley said.
The H200 chips at the center of the controversy pack significantly more processing power and memory bandwidth than anything China can currently produce domestically. According to the House Select Committee on China, a Republican-led panel, these capabilities could help Beijing "catch up to America in total compute" and strengthen both military applications and surveillance systems.
Trump's move builds on a summer agreement that allowed Nvidia and AMD to sell less powerful chips to China in exchange for 15% of sales revenue. But China reportedly advised companies against purchasing those semiconductors, leaving the door open for this upgraded proposal. The revenue-sharing model appears designed to ensure American benefits from any technology transfer, though critics question whether financial gains justify potential security risks.
White House spokesman Kush Desai defended the administration's approach, telling CNBC that "The Trump administration is committed to ensuring the dominance of the American tech stack - without compromising on national security." But that assurance isn't satisfying lawmakers who've spent years warning about China's tech ambitions.
