As the world’s most valuable company, Nvidia now finds itself as a pawn in President Donald Trump’s unprecedented trade war with China. This results in Nvidia, a corporation valued at 4.5 trillion dollars, agreeing to a remarkable concession which will pay the US a cut of every high-end AI chip sold in China.
Along with Nvidia, AMD has also signed the deal which will presumably satisfy the two competing goals of the Trump administration. Presumably, these dual goals of maintaining US dominance in AI technology while trading with China, could give the White House a blank check for spending.
Nvidia and AMD will be granted the right to export some of its technology to China for a license, and in return, pay the US government 15% of their revenue for the tech’s use, AMD and Nvidia will now share the deal.
Nvidia’s and AMD’s MIT and H20 chips are some of the AI technology blocked for export to China. These components are essential for AI tools, and with the signed deal, companies are now allowed to covertly apply for the export license to those AI chips, as stated by a US representative to CNN.
Nvidia showcased the agreement when the company announced the resumption of the H20 chip sales to China with the recent changes to the Trump administration’s restrictions on the export of certain AI chips. But the 15% charge took everyone by surprise. As Trump mentioned, Nvidia was initially asked to pay a 20% cut, but they negotiated the rate down to 15% instead.
Based on the statement, the agreement was made after Huang Jensen, Nvidia’s CEO, met with Donald Trump on Wednesday. As per the statement, export licenses were granted on Friday, but no shipments have been made to date.
Why Is Trump Charging 15%?
A lot of folks keep asking how the 15% commission idea got started and what the real national security risks are.
A U.S. official explained that the fee keeps the White House in the driver’s seat on chip exports and brings money into the federal budget. But there’s still doubt that the extra charge on Nvidia and AMD will actually slow chip sales to China or eliminate security worries.
“If there’s a solid national security worry about shipping these chips to China, paying a fee to the U.S. Treasury doesn’t lower that risk at all,” said Scott Kennedy of the Center for Strategic and International Studies. “If the worry’s big enough, the sale should not happen. Meanwhile, if the chips can be exported safely, the U.S. should let companies do their work without costing them or the Treasury anything.”
What does this mean for Nvidia?
Nvidia introduced the H20 chip last year to keep tapping the Chinese market—accounting for about 13% of the company’s sales in 2024—after the Biden administration tightened US export controls.
The H20 has come under scrutiny since it is suspected to be part of the training infrastructure for DeepSeek, a top-tier Chinese AI model that startled Valley insiders when it surfaced earlier this year. That revelation spurred fears that China’s AI progress is deeper than analysts had considered.
Following the Trump administration’s ban on all H20 shipments to China in April, Nvidia disclosed that it had to write down billions in charge and lost projected sales for the first quarter and is forecasting a repeat in the current quarter.
How Important valuable company Are These Chips?
Trump recently dismissed Nvidia’s H20 chip as “obsolete,” claiming China has it in a “different form.”
However, researchers hold a different view. “The H20 is still cutting-edge,” CSIS’s Kennedy insists. He notes that while it lags some newer Nvidia offerings, “it packs features that give it a unique edge,” particularly around memory design.
Nvidia’s H20 is strong in inference, too, explains Param Singh, a Carnegie Mellon professor. In AI, inference is when a model generates an answer. That performance keeps the H20 relevant in tech that keeps improving.
Website Reference:
https://edition.cnn.com/2025/08/11/tech/nvidia-amd-trump-china-explained