An unprecedented new revenue share on chips sold to China reveals Donald Trump’s economics of control.View this email in your browser [link removed]
[link removed]
**AUGUST 11, 2025**
**On the
**Prospect **website**
[link removed]
Tariffs as War [link removed]
Under Donald Trump, all policies have to be coercive. Hence, this week, his tariffs on the Swiss.
**BY HAROLD MEYERSON** [link removed] [link removed]
[link removed]
Illinois Could Downgrade Arts Education [link removed]
Arts educators worry that education officials will backpedal on the state’s historic commitment to students.
**BY BRANDON MALAVE** [link removed]
[link removed]
When Sleeping Is a Crime [link removed]
With a new executive order and model state legislation criminalizing homelessness, the richest people in the U.S. are making it easier to lock up the poorest.
**BY COLLEEN SHADDOX** [link removed] [link removed]
****Dayen on TAP****
**Tariffs to import and fees to export**
**An unprecedented new revenue share on chips sold to China reveals Donald Trump’s economics of control.**
It might surprise people, but Donald Trump’s second term has been exceedingly friendly to China. He has repeatedly (and illegally) **extended the deadline** [link removed] for Chinese divestment of TikTok, enabling surveillance collection without interference. He **shut down Radio Free Asia** [link removed], a soft-power tool established to counter Chinese propaganda since Tiananmen Square. He shockingly **denied transit through the U.S.** [link removed] to Taiwan President Lai Ching-te, appearing to side with China in the long-standing tensions between those two countries.
Perhaps worst of all, last month Trump **allowed Nvidia** [link removed] to sell H20 chips in China again, reversing a Biden-era export control after CEO Jensen Huang made a personal appeal. Eliminating export controls was a key ask from China in trade negotiations, and Trump was fine with giving it to them.
We’re now learning more about the deal, and it reveals Trump’s real interests, which have little to do with economic competition in the 21st century. Nvidia and another chipmaker, AMD, will **pay the U.S. government 15 percent of their revenues** [link removed] from China chip sales directly, in what amounts to an export license fee. This is unprecedented in U.S. history; where tariffs make companies pay to import, now Trump is forcing payment to certain companies to export. (The Constitution explicitly bars export taxes, if that matters anymore.)
Fifteen percent of Nvidia H20 chips in China comes to something like $3.5 billion a year. But getting hooked on that revenue would almost certainly be counterproductive. The U.S. economy is all but relying on developing artificial intelligence that firms can export abroad. Selling chips used in AI data processing to China raises the likelihood that Chinese models will become more of the standard-setter, undercutting the giant bet that U.S. firms are making. Even if the models are produced with U.S.-designed chips, the models themselves are much more lucrative.
China hawks have raised the possibility that the Chinese military, the only thing close to an adversary of the U.S., will benefit from access to cutting-edge technology as well.
prospect.org/donate
More broadly, Trump is accelerating the transformation of the U.S. economic system, from a form of capitalism that always socialized the risks for too-big-to-fail industries to a **state-directed mercantilism** [link removed] for the purposes of flattering the head of state.
Trump likes having a “golden share” in U.S. Steel that can allow him to dictate factory shifts, but he also likes getting cash from sales of products to competitors abroad, or a **stake in a critical minerals mining company** [link removed]. None of this necessarily makes jobs or economic growth the primary goal. It’s more of a haphazard form of cronyism than Nordic-style state involvement in the economy, or the industrial policy of the Biden years.
We see this in the chips industry in particular. Trump called for a **100 percent tariff on semiconductors** [link removed], but it had its own exemption for chips from Apple, after CEO Tim Cook literally showed up at the White House with a hunk of gold, a scene that would have been thrown out of a movie about corruption for being too on the nose. Trump wants countries and companies **flocking to Washington** [link removed] seeking exemptions from his trade tyranny, whether that benefits the country or his own wallet. Yet he’s also happy to **bend to China’s demands** [link removed] to relax export controls on chips, if it gets him closer to a summit with Xi Jinping and a deal where the announcement is more important than the substance. (Technically, the deadline for a U.S.-China deal was **tomorrow** [link removed], but the two sides **announced a 90-day extension** [link removed].)
Taken as a whole, the Trumpian system of state-dominated economics is incoherent. It’s enough to make any company consider producing and selling to the 96 percent of the population living outside of America, leaving us as an island of backward technology and inadequate supply.
**– DAVID DAYEN**
Follow David Dayen on Bluesky [link removed]
prospect.org/donate
To receive this newsletter directly in your inbox, click here to subscribe [link removed]
**Click to Share This Newsletter**
[link removed]
[link removed]
[link removed]
[link removed]
[link removed]
The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States
Copyright (c) 2025 The American Prospect. All rights reserved.
To opt out of American Prospect membership messaging, click here [link removed].
To manage your newsletter preferences, click here [link removed].
To unsubscribe from all American Prospect emails, including newsletters, click here [link removed].
