Trump’s 15% AI Chip Deal Reshapes U.S-China Trade

- Nvidia and AMD can now export advanced AI chips to China under a U.S-approved deal. - The U.S. government will receive 15% of the revenue from these sales. On August 11, 2025, Reuters reported that U.S. President Donald Trump finalized a deal with Nvidia and AMD, allowing the companies to export their advanced AI chips to China. In exchange, the U.S. government will receive 15% of the revenue from these sales. The deal provides the necessary export licenses for previously restricted chips like Nvidia’s H20 and AMD’s MI308, thereby enabling both companies to maintain their presence in the competitive Chinese semiconductor market. The agreement aims to bolster U.S. chipmakers’ competitiveness against Chinese rivals, such as Huawei, and industry analysts have highlighted its significance. Speaking to Reuters on August 11, Neil Shah from Counterpoint Research described the revenue share as an “indirect tariff at source.” In the same report, Daniel Newman, CEO of The Futurum Group, called the deal a “tax” for operating in China and emphasized its strategic role in preventing market loss to Chinese producers. According to the report, Nvidia reaffirmed its commitment to comply with all U.S. and global trade regulations. On August 11, Ben Barringer, a global technology analyst at Quilter Cheviot, told Reuters that the deal would impact pricing strategies, suggesting companies might pass the 15% cost on to consumers. He also highlighted the broader pressure the deal creates for cost management, stating, “85% of the revenue is better than zero.” Several experts believe this arrangement shows that the government prioritizes strategic technologies like AI semiconductors in trade negotiations. However, the software and services sectors may remain unaffected because their export dynamics differ. On August 11, Nick Patience from The Futurum Group told Reuters, “governments treat semiconductors as a crucial and distinct industry in these kinds of deals.” From China’s perspective, the deal highlights a tension between advancing its AI capabilities and addressing security concerns. Despite financial and technological constraints, analysts expect Chinese firms will continue to purchase Nvidia and AMD chips, as these are necessary to drive AI development amid growing domestic and global competition. This agreement exemplifies President Trump’s transactional trade approach, following similar actions from earlier in the year. In May 2025, the administration dropped its threat of a 25% tariff on iPhones after Apple committed to a landmark $600 billion domestic investment. Consequently, the Nvidia and AMD deal now raises questions about whether the government will impose similar measures on other leading U.S. technology companies for their international operations.