In a surprising turn of events, President Donald Trump has taken a bold step back from previous restrictions on exporting advanced AI chips to China as negotiations between the two leading economies continue. This new alignment comes at a time when Trump is eager to secure a trade agreement, hoping to demonstrate that his unorthodox approach is yielding results.
This week, the United States and China have agreed to extend their negotiations and avoid yet another round of tariffs that could have negatively impacted the already fragile business relations between both nations. In exchange for allowing American companies Nvidia and Advanced Micro Devices to sell certain chips to Chinese firms, the U.S. government will receive a 15 percent cut from the revenue of these sales.
Critics of this decision, including former Deputy National Security Adviser Matt Pottinger and other policy experts, argue that this move undermines American national security. They have expressed strong concern that Trump’s willingness to allow the sale of Nvidia’s H20 chip to China represents a strategic misstep that could threaten the United States’ economic and military dominance in the field of artificial intelligence.
Prior to this, in 2022, then-President Joe Biden imposed a ban on exporting advanced AI chips to China, which was reaffirmed by Trump just four months ago as he expanded those restrictions. However, this latest reversal indicates a willingness to concede to Chinese President Xi Jinping’s persistent demands to lift U.S. export controls on critical technology.
Trump rationalized his decision by claiming that the H20 chip is not one of Nvidia’s most powerful products. While it may not reach the pinnacle of AI capabilities, it is far from obsolete. Chinese companies are eager to access the H20 chip to enhance their AI service deployments, and its availability has caught the attention of Chinese authorities, emphasizing their desire to limit reliance on U.S. technology.
Despite efforts to develop domestic alternatives, Chinese firms find themselves constrained by U.S. restrictions that prevent them from using Taiwan Semiconductor Manufacturing Company, the world’s leading chip manufacturer. In light of this landscape, Trump’s decision has opened the door for further concessions under pressure from China’s tech industry and Xi’s leadership.
During negotiations, there are suggestions that, due to the ongoing advantage of U.S. technology, China will likely push for further reduction of restrictions on even more advanced semiconductor sales. Trump indicated openness to allowing Nvidia to sell downgraded versions of its top chips, showcasing a potential for slippage in U.S. export control policies.
Xi’s confidence appears to be growing, with access to strategic talks giving him leverage against the Trump administration. Experts like Ali Wyne from the International Crisis Group highlight concerns that this could lead to a skewed bargaining position favoring China. The Chinese government has demonstrated commitment in the negotiations, sending a substantial team of 75 officials to the latest talks compared to Trump’s contingent of just 15.
Currently, the focus for both nations is highly concentrated on attaining a trade deal, but the balance of concessions appears slanted towards China’s favor. Throughout this ongoing dialogue, Xi has had notable successes concerning Taiwan, effectively conveying to Trump a need for caution. Reports suggest that this has influenced Washington to cancel meetings with Taiwanese officials, a strategic win for Beijing aiming to isolate Taiwan’s government.
In contrast, the goodwill gestures from China have been limited. One significant move was Beijing’s recent announcement to regulate the sale of two chemicals used in the production of illegal fentanyl. However, as many analysts point out, this will most likely depend on the Trump administration’s behavior and platforms for engagement.
Trump has even requested Xi to boost purchases of U.S.-grown soybeans, a benefit for American farmers, but critics argue this is not a fair balance in exchange for Chinese access to advanced technology. During this complex dance, Xi has used his leverage as a pressure tactic, notably imposing restrictions on rare-earth metal exports to the U.S. as a negotiating tool.
Ultimately, while it is uncertain whether Xi will achieve all of his objectives, his strategy of continual engagement and negotiation appears to bear fruit. China has managed to capture Trump’s attention and divert focus away from broader strategic challenges posed by its increasing power. The urgency to finalize trade agreements has overwhelmed longer-lasting strategies necessary to confront China’s ambitions effectively.
In an unrelated move, President Trump recently imposed high tariffs on Indian goods in a bid to deter India’s oil imports from Russia, a decision that may risk antagonizing potential allies in the global competition against China.
While diplomacy and more amicable relations with China are preferable to open conflict, the underlying question persists: what cost will be attached to these concessions? If Trump moves forward with a trade agreement that brings temporary satisfaction but lessens long-term national security, the implications could be dire for the United States.
image source from：theatlantic
