Lutnick Stalled Curbing Nvidia Chip Sales to China, Sources Say
Six officials briefed on White House talks say Commerce Secretary Howard Lutnick delayed export controls on suspected Nvidia chip diversion to China, even after President Trump approved action. A Commerce spokesperson denied that Treasury Secretary Scott Bessent confronted him.
Commerce Secretary Howard Lutnick has repeatedly stalled export controls on companies suspected of diverting Nvidia's advanced AI chips to China, according to six high-level sources briefed on the discussions. President Donald Trump has approved a crackdown at least three times this year, in May, August and on Nov. 5, yet the controls have not been put in place.
The standoff matters because the administration has not acted against Megaspeed, the company at the center of suspected chip smuggling and an espionage scandal. It also shows how efforts to keep American technology out of China's hands have broken down inside the government.
Situation Room showdown
At a Situation Room meeting, Lutnick faced Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, U.S. Trade Representative Jamieson Greer and Secretary of State and National Security Adviser Marco Rubio. Sources said Bessent pressed Lutnick on why his department had resisted the controls, particularly on Megaspeed. The group sided with Bessent.
Lutnick appeared to agree, then muttered, "I need to check with the president." The sources said that raised alarm, because officials had repeatedly expected Commerce to impose the controls only to see nothing happen. "He's stalling it out," one official said.
One person in the room challenged him: "Great. Why don't we do it today?"
Oval Office call with Musk
Around 5pm the group went to the Oval Office. Trump called tech adviser Elon Musk, who backed the case made by Rubio, Bessent, Greer and Hegseth. Lutnick, the lone holdout, warned the move "will start a trade war with China."
Sources said the others answered that China is already doing to the U.S. what Lutnick feared. Trump then decided: "Let's get it done."
Outside the Oval Office, Lutnick proposed a new delay. "I'll develop some options and come back," he said. According to one source, colleagues told him the decision had been made and he should execute it. "Well, it still hasn't happened," the source said.
Earlier resistance
Lutnick and Commerce Undersecretary Jeffrey Kessler resisted pressure from Bessent and others on all three occasions, the sources said. In May, a highly classified memo was shared with the president and other officials. It warned about Jensen Huang's relationship with Alice Huang, a Megaspeed employee that U.S. intelligence suspects of being a Chinese agent.
At a later meeting, Bessent, Director of National Intelligence Jay Clayton, Hegseth and White House officials pressed Lutnick and Kessler to act. One source said "they were refusing."
Last year the administration said it would loosen export controls on Nvidia's H200 chips, which are older but still powerful. Trump agreed to allow sales to China in exchange for a 25% tariff, a change Nvidia has lobbied hard for.
Commerce Department spokesperson Kristen Eichamer denied that Bessent confronted Lutnick. She did not immediately comment on the other allegations.
