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The recent deal between Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), and the US government marks an alarming shift in how trade policy is being conducted. Under the agreement, the two semiconductor giants will hand over 15% of their China AI chip revenues in exchange for export licences.
This arrangement, which covers Nvidia’s H20 and AMD’s MI308 chips – both redesigned for the Chinese market after earlier restrictions – risks recasting export controls as financial transactions rather than as national security safeguards.
Never before in US history has access to export licences been monetised in this way. The move follows a meeting between Nvidia CEO Jensen Huang and President Donald Trump, after which the Commerce Department’s Bureau of Industry and Security began issuing licences just two days later.
On the surface, it may appear like a pragmatic compromise: US companies keep selling, the government collects billions, and China gets access to high-end chips. In reality, it is a precedent that could destabilise the foundations of global trade.
For Nvidia, the stakes are enormous. The company could sell 1.5 million H20 chips in China in 2025 alone, generating about $23 billion. AMD’s dependence on China as a growth driver is also significant – the market accounted for roughly a quarter of its total revenue last year.
The new 15% levy will channel vast sums into the US Treasury. But the cost is far greater than the financials suggest.
Export controls are supposed to be grounded in clear, consistent, technical criteria that protect national security. The moment they are converted into revenue-sharing schemes, their purpose changes entirely. They stop being predictable safeguards and start becoming bargaining chips. This sends a destabilizing message to global markets and erodes trust between trading partners.
This deal is not a one-off anomaly. It could serve as a template. If the US – the world’s largest economy – can auction off export permissions, other governments will notice and follow suit. We could see market access become a matter of political leverage and financial willingness rather than rules-based governance. That is exactly the opposite of what global business needs to function effectively.
The policy’s origins are telling. The Trump administration moved in April to ban Nvidia’s H20 outright. That ban was reversed in June, but licences were withheld until this new agreement emerged. Some in the US security community still argue that these chips could enhance China’s AI capabilities in ways that indirectly benefit its military. Others claim the deal is a win-win: keeping US companies competitive in China while generating funds for national priorities.
But blending these objectives corrodes the credibility of trade policy. When market rules can be bent for a price, they lose legitimacy – both at home and abroad. Allies begin to question the consistency of US commitments. Investors start factoring in new forms of political risk. As such, adversaries gain a ready-made excuse to introduce their own revenue-linked restrictions.
If this approach spreads, international supply chains will become less predictable. Companies will face higher costs, be forced to build costly redundancies, and potentially accelerate the relocation of investment and R&D away from the US. Predictability is the cornerstone of investor confidence.
When policy becomes negotiable for a fee, companies will act defensively – shifting production, diversifying export markets, and limiting exposure to the US regulatory sphere.
Businesses thrive on certainty, not transactional unpredictability. Once licensing is turned into a commodity, it is nearly impossible to reverse. This is not just about semiconductors, China, or one administration’s trade strategy.
It’s about whether the US – and by extension the global trading system – can uphold transparent, rules-based trade. Without that, trust will unravel, and markets will inevitably adjust – in ways that could harm competitiveness, innovation, and stability for years to come.