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The News
U.S. Treasury Secretary Scott Bessent is assigning responsibility for the Commerce Department's failure to properly oversee high-end AI chip exports to the company Nvidia scandal, which has now expanded to implicate President Donald Trump directly. The Commerce Department, led by Howard Lutnick, has faced increasing pressure from various political factions to justify its actions that allowed the export of sensitive technologies despite security concerns.
In an interview with CNBC, Bessent expressed frustration regarding the delay in adding Megaspeed to the entity list, noting that several agencies had supported this measure for months. He added that President Trump was very clear on not allowing any Nvidia chips beyond the H100 model to reach China, making any leakage of such technology painful for American companies and giving China a dangerous competitive advantage.
Conversely, Bessent pointed out that the real story should focus on whether Nvidia knew its customer beforehand and whether the company made a strong effort to prevent leaks and ensure chips were not sold through shell companies. He called for accountability against anyone in the company responsible for this matter, considering that the current focus on Jensen Huang's personal mistakes does not reflect the full picture of institutional responsibility.
Lutnick and Huang now face an investigation summons before the House Banking Committee next month regarding their role in allowing advanced chip exports, while Democratic congressional committees have requested a complete record of all decisions and communications related to Nvidia. Senate Majority Leader Tim Scott described these reports as raising serious concerns about national security and protecting sensitive American technology.
Separate investigations have also begun in the Financial Services Committee and the Budget Committee on how Nvidia was allowed to sell its advanced chips, with mention of the possibility that H200 chips were sold to Chinese companies if they initially imported them from Taiwan for inspection and imposed a 25% tariff. Officials noted that President Trump's use of trade law in this context appears to have achieved the exact opposite, weakening U.S. national security and exposing citizens to risk.
Analysis & context
Analysis & Context
From an analytical perspective, this dispute represents a rare instance of frank internal discussion within the Trump administration, revealing underlying tensions between Bessent and Lutnick since 2024 when they competed for the position of Treasury Secretary. These crises reveal a deeper struggle over tariff policies and national security management under the return of the U.S. President to the White House, where different departments clash on how to handle technological threats coming from China.
In the broader context, the issue of the "Megaspeed" company and the pressure to add it to the blacklist raises questions about the effectiveness of U.S. export control mechanisms. While initial investigations pointed to suspicious activity by the company in smuggling chips, independent reports indicated a deliberate delay by the Commerce Department in taking necessary actions, reflecting the complexities of government bureaucracy and their direct impact on U.S. national security.
Furthermore, this highlights a radical shift in the policies of the U.S. Congress toward "Nevada" (referring to Nvidia), where both Democratic and Republican committees have begun investigating how advanced chips like the H200 category were sold to Chinese companies through re-export operations from Taiwan. These investigations suggest that President Trump's use of trade laws has had a counterproductive effect, weakening U.S. national security rather than strengthening it, thereby placing American leadership before unprecedented legal and political challenges.
