In a landmark policy shift that redraws the battle lines of the US-China tech war, the Trump administration has formally approved the export of Nvidia’s advanced H200 AI chips to China. The move, codified in a new rule published Tuesday by the Department of Commerce’s Bureau of Industry and Security (BIS), replaces a years-long "presumption of denial" with a case-by-case review process. Crucially, the new framework imposes a 25% royalty fee on every sale, payable directly to the U.S. Treasury—a stipulation President Trump has touted as a mechanism to monetize American innovation while maintaining strategic leverage.

New Export Rules: A Strategic Pivot

The revised regulations mark a significant departure from the blanket bans that characterized recent years. Under the new US chip export policy 2026, semiconductor giants like Nvidia and AMD can now apply for licenses to sell specific high-performance hardware, such as the H200 Tensor Core GPU, to Chinese commercial entities. This specific chip, while not Nvidia’s most powerful model compared to the newer Blackwell series, represents a massive leap in processing power for AI training and inference compared to what was previously available to Chinese markets.

Commerce Secretary Howard Lutnick defended the decision, stating that the policy allows the U.S. to "dominate the economic landscape" while strictly controlling the flow of technology. The administration argues that by permitting these sales, the U.S. can undercut China’s domestic chip manufacturing efforts, such as those by Huawei, which have been gaining traction in the absence of Western alternatives. "If we don't sell it to them, they will build it themselves," a White House official noted during a background briefing.

The 25% Royalty and 'Know-Your-Customer' Protocols

The most unprecedented aspect of this policy is the financial structure. Every approved shipment of Nvidia H200 China export units will trigger a 25% surcharge. This fee is collected as an import tax when the chips—manufactured largely in Taiwan—enter the United States for mandatory security inspection before being re-exported to China. This "America First" tariff is projected to generate billions in revenue for the U.S. Treasury, though industry analysts warn the cost will likely be passed down to Chinese buyers.

To secure a GPU export license, companies must adhere to rigorous compliance standards. The BIS has mandated strict "know-your-customer" (KYC) protocols to ensure the hardware is not diverted to the People’s Liberation Army (PLA). Requirements include:

  • Third-Party Verification: Independent auditors must verify the identity and business nature of the Chinese end-user.
  • Technical Safeguards: Chips may be subject to software locks or "geofencing" to prevent unauthorized clustering or military use.
  • Supply Chain Transparency: Full traceability from the foundry to the final datacenter is required.

Industry Reaction and Market Impact

Wall Street reacted positively to the AI semiconductor news, with Nvidia shares ticking up 2% in pre-market trading. For Nvidia, this reopens a door to a market that once contributed nearly a quarter of its revenue. However, questions remain about demand. Reports suggest that Beijing is simultaneously pressuring its domestic tech giants, such as Alibaba and Tencent, to prioritize homegrown silicon over American imports, potentially muting the immediate financial windfall for U.S. firms.

Political Fallout and Security Concerns

The Trump Nvidia China deal has drawn sharp criticism from national security hawks in Washington. Congressional Democrats and some Republicans have voiced concerns that the H200, despite not being the absolute top-tier chip, is powerful enough to accelerate China’s military AI capabilities. "This is a short-sighted cash grab that mortgages our national security," said Senator Mark Warner in a press statement. Critics argue that the "case-by-case" review could become a rubber stamp under pressure to generate treasury revenue.

Despite the controversy, the Department of Commerce BIS maintains that the "presumption of denial" remains in effect for the most cutting-edge technologies, such as the Blackwell B200 and upcoming Rubin architecture. The administration insists that the H200 exports strike a "pragmatic balance," keeping American tech companies profitable and dominant while ensuring the very best technology stays out of adversarial hands.