by Phil Kerpen
Trump has no shortage of issues to negotiate with Chairman Xi Jinping at their May 14-15 summit in Beijing, but with Trump asking NVIDIA CEO Jensen Huang to join them, it’s likely semiconductors will be high on the agenda. NVIDIA’s competitors are lobbying hard to undermine a thawing that could pave the way toward American chips used in Chinese data centers, but Trump should ignore them in America’s strategic and economic interests.
Export restraints on the world’s leading chipmaker, NVIDIA, amount to an American sanctions regime against an American company. The geniuses at the Department of Commerce have decided that they are better equipped to manage the global semiconductor trade than the companies actually building the technology and, in their attempt to secure a geostrategic lead for the US, are more likely to undermine it. This bureaucratic overreach fundamentally misunderstands how global leadership is sustained in the rapidly changing AI landscape. Our economy – and national security – would be far better served by letting the market function.
The Trump administration notionally lifted the outright ban on NVIDIA selling H200 chips to Chinese buyers in January, but Commerce Secretary Howard Lutnick testified in the Senate last week that no sales have yet been authorized, and China’s current policy is an impediment. If sales do proceed under the new policy, they will be subject to a 25% export tax.
The logic behind these export controls is fundamentally flawed. Advocates think Washington can prevent high-end silicon from reaching specific markets through simple prohibitions. This is a fantasy. In the real world, these chips are high-value, portable, and in global demand. When lawful access to prior-generation chips is restricted, buyers and intermediaries have fewer incentives to remain inside transparent, regulated channels. If our goal is to keep the most advanced chips with military applications out of Chinese hands, then direct sales of prior generation chips offer a lower risk, lower cost alternative that makes compliance more likely.
NVIDIA’s share of China’s AI chip market fell from 95% in 2022 to zero in 2025 amid the export-control fight and Chinese restrictions on American chips in state-funded data centers. China has put roughly $47.5 billion behind its latest state-backed semiconductor fund, while Huawei is already preparing mass shipments of Ascend AI chips aimed at filling the vacuum left by NVIDIA restrictions.
For decades, American silicon has been the undisputed global standard. By making that hardware a tool of geopolitics, the government has signaled to China and the rest of the world that American technology is a risk to their own stability. We practically begged Beijing to fund a domestic competitor to NVIDIA and now they are doing it. Every time a shipment is blocked (or even taxed), we provide a reason for the Chinese to successfully clone or replace American designs. How does this serve American interests?
Arbitrarily limiting export markets also functions as a tax on innovation. The research and development for next-generation chips requires billions of dollars in investment before a product ever reaches a customer. To recoup those costs, provide a return on capital, and fund the next breakthrough, American firms should have access to the largest possible global markets. When foreign governments block American market access, we cry foul. But export controls function as sanctions on ourselves, imposing the same economic harms as foreign trade barriers.
While international competitors can operate with agility, NVIDIA and its partners are bogged down in a thicket of licensing requirements and shifting definitions of what constitutes restricted technology.
Instead of trying to win by obstructing others, the United States should focus on maintaining its lead through superior performance. Fragmenting the global market only serves the interests of our rivals. The best way to ensure American leadership in artificial intelligence is by competing and winning in the market, not imposing trade restrictions on ourselves.