Trump's Nvidia move could help China win the AI war, analysts say

The Trump administration has finally found a way to put a price on America’s AI edge. For a 25% cut of Nvidia’s China revenue, Washington is loosening its grip on H200 chips that security hawks thought were off the table — and a growing chorus of analysts says that trade hands Beijing the initiative.

On Truth Social, President Donald Trump cast the move as a tidy solution: limited access for approved Chinese customers, strict oversight by the Commerce Department, and a promise that Nvidia’s newest — and best — hardware stays home. Nvidia put out a statement calling the H200 framework a “thoughtful balance that is great for America.”

But the Washington policy crowd isn’t buying the “thoughtful balance” line. On X, Rush Doshi, a Georgetown professor and former National Security Council official, called the move “a big deal,” and “essentially a reversal of the US export control policy on advanced chips,” adding that it is “possibly decisive in the AI race.” He noted that China already has an edge in electrical power, engineers, and “the entire edge layer” —  “so by giving this up we increase the odds the world runs on Chinese AI.”

The worry about the degradation of the United States' compute edge echoed across social media. Tim Fist, director of emerging technology at the Institute for Progress, warned that this move “gives Chinese AI labs chips that outperform anything China can make until 2028.” Alec Stapp, the group’s co-founder, was even blunter: “Massive own goal to export these AI chips to China. The H200 is 6x more powerful than the H20, which was previously the most powerful chip approved for export. Our compute advantage is the main thing keeping us ahead of China in AI.”

Chris McGuire, a senior fellow for China and emerging technologies at the Council on Foreign Relations, framed this decision as a hinge moment rather than a marginal tweak. “This is a seachange in U.S. policy, and a significant strategic mistake,” he wrote on X. “If the United States sells AI chips to China that are 18 months behind the frontier, it negates the biggest U.S. advantage over China in AI.”

In a separate post, he called the approval “the single biggest change in U.S.-China policy of the entire administration” and described it as “a transformational moment for U.S. technology policy, which until now had been predicated on investing at home while holding China back. Now we are trying to win a race against a competitor who doesn’t play by the rules.”

Tom Wright, a senior fellow at Brookings, wrote that the Nvidia-China deal is a “catastrophic decision” and, in another post, that this is “the modern day equivalent of letting China into the WTO.” Shashank Joshi, defence editor at The Economist, said on X that this is an “extraordinary abdication of tech competition.” Former U.S. ambassador to NATO Michael Carpenter read Trump’s note about Xi’s positive reaction and wrote, “Bet he responded positively. He’s eating our lunch.” He added that this was “such a strategically myopic move. We’ll be looking back on this in years ahead and wondering what motivated such an own-goal.” And Bill Bishop, who has watched the semiconductor rivalry evolve in slow motion, wrote that the arrangement is “just a gift to nvidia and China, not getting anything in return.”

Those warnings are colliding with a domestic political shift that’s already in motion. A bipartisan bloc of senators has rolled out the SAFE Chips Act, which would impose a 30-month ban on exporting advanced AI chips such as the H200 and Blackwell to China and other strategic rivals. “The United States leads the AI race with Communist China due in large part to our dominance of global compute power,” Republican senator Pete Ricketts said when announcing the bill. “Denying Beijing access to these AI chips is essential to our national security.” Trump’s deal cuts in the opposite direction.

Democratic Congressman Ted Lieu wrote on X: “For Republicans who say we can’t put any regulations on American AI companies because … China, well guess what, Trump just made your argument look really stupid.”

But even as Trump describes a warm conversation with Xi, the Financial Times reports that Beijing plans to limit domestic access to H200s and force buyers to justify why they need Nvidia hardware instead of Huawei’s Ascend chips or other homegrown GPUs. State-backed systems already run on local silicon. Domestic GPU startups have been minted and listed as mascots for self-reliance. Beijing can welcome the H200s where they help, ration them where they threaten political priorities, and keep pouring money into local champions either way.

Nvidia, meanwhile, gets a shot at reviving a market it had written down to zero in its guidance. Trump gets to say he protected Blackwell, taxed China, and backed “GREAT American Companies.” And the analysts who are actually paid to think about power, not just price targets, are looking at the same deal and seeing something else: a United States that has started charging rent on its AI moat, and a China that now gets to decide how much of that advantage it wants to buy.