The administration reverses long-standing controls on sales of advanced AI chips to Beijing.
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JULY 18, 2025

On the Prospect website

Epstein Signals the End of Donald Trump’s Crackerjack Crisis Management Style

For a decade, his chump fan base automatically believed his lies—until now. BY RYAN COOPER

Why Is Blue Oregon Trying to Kill Voter-Approved Free Preschool?

The social benefits of preschool extend far beyond the playground. Yet state officials are working on paring back a fledgling Multnomah County early-education program. BY GABRIELLE GURLEY

Crypto Week Revealed the Dittohead Congress

There are no ‘hard-liners’ in the Republican conference. And nobody interested in standing up for the institution of Congress either. BY DAVID DAYEN

Kuttner on TAP

Another Trump Sellout to China and Big Tech

The administration reverses long-standing controls on sales of advanced AI chips to Beijing.

Nvidia, the leading chipmaker for artificial intelligence, has grown to a $4 trillion company. AI, love it or hate it, will be the mother technology of the future, driving other technologies—and a key element of the scientific and geopolitical rivalry between the U.S. and China.


In April, as part of his cold war with China, Trump blocked all sales of an AI chip that Nvidia had designed specifically for the China market. But on Monday, Trump reversed course and assured the company that licenses for the special chip and other chips directed at the China market would be approved.


This is a total reversal of U.S. policy. Since its inception, the Trump administration has been concerned that the Chinese military could use AI to develop weapons and to achieve global dominance of other technologies of the future. In January, Commerce Secretary Howard Lutnick told Congress during his nomination hearing that he thought Nvidia and other tech companies “need to stop helping” China and stop allowing it to use “our tools to compete with us.”


As recently as June, Lutnick told a House subcommittee, “They are trying to copy our technology and in the race for AI supremacy, they are behind us, but they are working with a central government out to get us.”


This past Tuesday, the Chinese government proved Lutnick’s (pre-reversal) point, when Beijing announced restrictions on export or transfer of eight key Chinese technologies used in manufacturing electric-vehicle batteries.


The policy reversal on AI chips came after Nvidia’s CEO, Jensen Huang, who has been lobbying for the policy change, got a Mar-a-Lago dinner and Oval Office meeting with Trump last week. The truly sinister part is who arranged the meetings and lobbied for the policy change inside the administration.


That would be David Sacks, Trump’s White House chief adviser on science and technology. Sacks’s portfolio also includes AI and crypto.

Sacks is a very close ally of Peter Thiel, and was a key developer with Thiel of PayPal. He and Thiel wrote a book together titled The Diversity Myth. He is at the center of a Silicon Valley cohort that wants government to just get out of the way except for providing contracts, tax breaks, and subsidies that make tech barons even richer.


It would be one thing if Sacks were merely a promoter of an extreme libertarian view of the nonregulation of tech. But in this case, his role, and Trump’s, epitomize how conflicts of interest also traduce national security.


A normal president would be pursuing a China policy that reflected a well-considered blend of carrots and sticks. China has some things that the U.S. needs, like rare earth materials and solar technologies (although we are becoming more self-sufficient in both). The U.S. has technologies that China needs, such as AI chips, and also has explicit security goals such as blocking export of dual-use technologies useful to China’s military. The U.S. also needs China’s support or at least noninvolvement in regional conflicts such as Ukraine and Iran.


A strategic China policy would set priorities for a hierarchy of negotiating goals, and include tariffs as part of the mix. Perhaps there would be a grand bargain, or maybe a series of lesser bargains.


This is the way China plays. But it is not the way Trump plays.


Trump just gave away something that China dearly needs—advanced AI chip technology—and got nothing in return. But he got a handsome IOU from corporate allies. Meanwhile, Trump’s on-and-off tariff threats are not part of a coherent China policy at all. The combination of policy chaos and Trump’s personal conflicts of interest give China a strategic advantage.


A tactical alliance with America’s new kleptocracy combined with his own conflicts of interest are Trump’s signature. It is one thing when this is merely corrupt, far worse when it sells out America’s military security.

~ ROBERT KUTTNER

Follow Robert Kuttner on Bluesky

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