U.S. Commerce Secretary Howard Lutnick delivered a firm message to Nvidia Corp. on Tuesday, stating that the company “must live with” the detailed licensing conditions attached to sales of its H200 artificial intelligence chip to China.
His statement underscores the Trump administration’s determination to enforce strict end-use controls on advanced semiconductors amid the ongoing U.S.-China tech rivalry.
Testifying before Congress, Lutnick emphasized that the licensing terms for the H200—the second-most-advanced AI processor cleared for export to China—were meticulously negotiated in coordination with the State Department.
“The license terms are very detailed. They’ve been worked out together with the State Department, and those terms Nvidia must live with,” he told lawmakers.
When asked whether he trusted Chinese entities to comply with restrictions aimed at preventing military end-use, Lutnick deferred directly to President Donald Trump, saying the “complex relationship” between the U.S. and China is ultimately managed at the highest levels: “They help us and instruct us and we follow their lead.”
Lutnick further connected the chip policy to broader strategic concerns, noting: “We all are familiar with the weaponization of critical minerals and rare earths and magnets, and so the resolution of those topics is really with the president.”
His comments reflect the administration’s view that advanced AI hardware is a national security asset on par with critical minerals, where China holds dominant global positions. The H200 licensing framework emerged from the U.S.-China trade truce brokered by Presidents Trump and Xi Jinping during their meeting in South Korea in October 2025. That agreement included a U.S. pledge to postpone by one year a sweeping new rule that would have barred shipments of American technology to thousands of Chinese firms on various restricted entity lists. In exchange, China offered certain trade concessions, though the full scope remains opaque.
Despite the U.S. authorization granted earlier in January 2026, Reuters reported last week that Nvidia has not yet fully agreed to the proposed conditions, particularly the “Know-Your-Customer” (KYC) requirement, which mandates rigorous verification of end-users to block any diversion to China’s military or intelligence apparatus. The approvals for Chinese buyers—including ByteDance, Alibaba, Tencent, and DeepSeek—came with additional stipulations still being finalized by China’s National Development and Reform Commission (NDRC), reflecting Beijing’s own cautious approach.
The H200, while less powerful than Nvidia’s latest Blackwell and upcoming Rubin architectures, represents a significant capability leap over earlier restricted models such as the H800 and A100. Chinese firms have been eager to acquire it for training and inference on large language models and AI infrastructure projects, but U.S. officials remain wary of potential military applications.
Congressional scrutiny has been intense. In a January 28 letter to Lutnick, House Select Committee on China Chairman John Moolenaar (R-Mich.) alleged that Nvidia provided technical assistance to DeepSeek that may have enabled major training efficiency gains, with resulting models later used by the Chinese military. The letter urged strict enforcement of end-use restrictions and raised the possibility of further legislative action or sanctions if compliance appears lax.
The situation presents a high-stakes balancing act for Nvidia. China has historically been one of its largest markets, but repeated U.S. export controls have already cost the company an estimated $8 billion in potential sales. The H200 clearance offers a limited pathway back into the market, but the stringent conditions, including robust KYC protocols and ongoing monitoring, add compliance costs and political risk. Nvidia has not publicly commented on Lutnick’s statements or the current status of its acceptance of the licensing terms.
The episode highlights the evolving nature of U.S. export control policy under the second Trump administration. While the October 2025 trade truce provided temporary relief, the administration continues to tighten controls on advanced technology transfers to China, viewing AI chips as dual-use technologies with critical military implications. At the same time, the policy reflects a pragmatic recognition that a complete cutoff could accelerate China’s push for technological self-reliance.
However, Lutnick’s remarks send a clear signal to the broader semiconductor industry – that licensing terms are non-negotiable and that ultimate authority rests with the president and senior national security officials. This has once again placed uncertainty on Nvidia’s push to return to the Chinese market, where a significant portion of its revenue had come from.
The H200 licensing saga remains a key test of how the Trump administration balances commercial interests, national security, and strategic competition with China.
