Air Force One diplomacy could reopen China to American chips
by Phil Kerpen · The Washington TimesOPINION:
President Trump brought a dozen American CEOs with him last week to meet with Chinese strongman Xi Jinping. The big headline win: Chinese orders for 200 new Boeing jets.
Interestingly, the Boeing sales have drawn less hand-wringing over national security than the possible breakthrough that would let Nvidia sell its chips to China, a potentially lucrative trade that has been blocked by policy restrictions on both sides.
Some American artificial intelligence companies that fear Chinese competition are furiously lobbying to keep American chips out of Chinese data centers, but Mr. Trump used his visit to the Chinese capital with Nvidia CEO Jensen Huang to demonstrate that this is not his view.
That is good news for America’s strategic and economic interests.
The Trump administration officially lifted the outright ban on Nvidia selling H200 chips to Chinese buyers in January, but Commerce Secretary Howard Lutnick recently testified that no sales have yet been finalized and that China’s current policy is an impediment.
If sales do proceed under the new policy, they will be subject to a 25% export tax.
Some members of Congress, companies, think tanks and lobbyists are fighting a rearguard action to keep export controls in place or even ratchet them up. They think these controls are better equipped to manage global semiconductor trade than the companies developing the technology. In their attempt to secure a geostrategic lead for the U.S., they are more likely to undermine it.
These advocates think Washington can prevent high-end silicon from reaching China by government fiat. This is nonsensical. Governments that have been powerless to stop the global drug trade cannot stop the flow of high-value microchips — period.
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Export controls do not prevent tech diffusion because they require only one illicitly obtained chip to reverse-engineer.
When lawful access to prior-generation chips is restricted, buyers and intermediaries have less incentive to remain inside transparent, regulated channels. If our goal is to keep the most advanced chips with military applications out of Chinese hands, then direct sales offer a lower-risk, lower-cost alternative to cloning and smuggling. This makes compliance more likely.
Nvidia’s share of China’s AI chip market fell from 95% in 2022 to zero in 2025 because of export controls and retaliatory Chinese restrictions on American chips in state-funded data centers.
The principal effects of banning American chips to China have been to erode U.S. chipmakers’ global market share, cost shareholders billions of dollars and incentivize the rise of Huawei.
For decades, American silicon was the undisputed global standard. By making that hardware a tool of geopolitics, we practically begged Beijing to fund a domestic competitor to Nvidia, so it did.
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How does this serve American interests?
The research and development for next-generation chips requires billions of dollars in investment before a product ever reaches a customer. To recoup those costs, provide a return on capital and fund the next breakthrough, American firms need access to the largest possible global markets.
When foreign governments block American market access, we rightly cry foul. Export controls function as sanctions on ourselves, imposing the same economic harms as foreign trade barriers.
Instead of trying to win by obstructing others, the United States should focus on maintaining its lead through superior performance. Fragmenting the global market serves only our rivals’ interests.
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The best way to ensure American leadership in AI is to compete and win in the market, not impose trade restrictions on ourselves or acquiesce to Chinese protectionism.
Mr. Trump intuitively understands this and has presented a clear picture by bringing Huang to China. His administration should move quickly to make this vision a reality.
• Phil Kerpen is president of American Commitment and a principal of Unleash Prosperity.