In a bold pivot from previous U.S. export restrictions, President Donald Trump’s administration has initiated an inter-agency review that could greenlight the first shipments of Nvidia’s high-powered H200 AI chips to China, according to five sources familiar with the matter who spoke to Reuters.
The move fulfills Trump’s recent pledge to permit such sales while imposing a 25% fee on the U.S. government, but it has ignited fierce backlash from critics who warn it could bolster Beijing’s military capabilities and undermine America’s AI edge.
The review, launched by the U.S. Commerce Department—which oversees export controls—has forwarded license applications for the chip sales to the State, Energy, and Defense Departments for input, the sources said, speaking on condition of anonymity due to the confidential nature of the process. Under federal export regulations, these agencies have 30 days to provide their assessments, after which the final decision rests with Trump himself.
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One administration official stressed that the evaluation would be rigorous, describing it as “not some perfunctory box we are checking.” The Commerce Department and Nvidia declined to comment immediately, while a White House spokesperson avoided specifics on the review but affirmed the administration’s stance: “The Trump administration is committed to ensuring the dominance of the American tech stack – without compromising on national security.”
This development marks a stark reversal from the Biden era’s stringent bans on advanced AI chip exports to China, implemented over fears that such technology could fuel Beijing’s military ambitions or be rerouted through third countries. Trump’s first term had similarly cracked down on Chinese access to U.S. tech, spotlighting allegations of intellectual property theft and dual-use applications for military purposes—claims Beijing has consistently rejected.
Proponents within the Trump team, including White House AI czar David Sacks, contend that allowing sales of the H200 chips could strategically deter Chinese firms like Huawei from accelerating their own AI advancements. By satisfying demand with American products, the argument goes, it reduces incentives for Beijing to invest heavily in domestic alternatives, helping U.S. companies like Nvidia and AMD maintain their lead.
However, the proposal has drawn sharp condemnation from China hawks on both sides of the aisle. Chris McGuire, a former National Security Council official under Biden and now a senior fellow at the Council on Foreign Relations, called the potential exports “a significant strategic mistake.” He labeled the H200 chips as “the one thing holding China back in AI,” questioning how agencies could deem the sales aligned with U.S. national security interests.
“I cannot possibly fathom how the departments of Commerce, State, Energy, and Defense could certify that exporting these chips to China is in the U.S. national security interest,” McGuire said.
The H200, Nvidia’s second-most advanced AI chip and predecessor to its flagship Blackwell series, excels in many industry tasks but has never been cleared for sale in China. Reuters previously reported that Nvidia is eyeing a production ramp-up for the H200 after early Chinese orders exceeded capacity. Trump had initially floated sales of a downgraded Blackwell variant but retreated, opting instead for the H200 amid ongoing scrutiny.
Uncertainties linger over Beijing’s response, including whether Chinese companies would be permitted to buy the chips and how swiftly approvals might materialize. The inter-agency process, unreported until now, underscores the high-stakes balancing act between economic gains—bolstered by the proposed 25% tariff-like fee—and geopolitical risks in the escalating U.S.-China tech rivalry.
As the 30-day clock ticks, the outcome is expected to impact global AI supply chains, testing Trump’s vow to prioritize American innovation while protecting the U.S.’ national security interests.