Trump Administration Forces 15% Revenue Cut From Nvidia, AMD on China AI Chip Sales
Washington D.C., August 11, 2025 — In a move shaking both Wall Street and Silicon Valley, the Trump administration has announced a new trade policy requiring U.S. chip giants Nvidia and AMD to hand over 15% of their AI chip revenue from China to the U.S. government in exchange for export licenses.
The decision, confirmed by President Donald Trump in a press briefing on Monday, is being hailed by supporters as a bold step toward “America First” economic protectionism — but criticized by analysts as an unprecedented intrusion into the free market.
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Trump’s Announcement and Negotiations
Speaking from the White House, Trump bluntly called Nvidia’s current H20 AI chips “obsolete” and revealed he had personally negotiated the deal with Nvidia CEO Jensen Huang. According to Trump, the initial proposal demanded 20% of Chinese sales revenue, but he “settled” for 15% after discussions.
“I told Jensen, ‘Listen, we need a fair deal for America. You can sell your chips to China, but the American people deserve a share,’” Trump stated. “We’re going to use this money to rebuild U.S. manufacturing and invest in our tech future.”
AMD is reportedly subject to the same arrangement, with both companies required to remit payments directly to the U.S. Treasury as a condition for receiving export licenses for AI hardware shipments to China.
Market and Industry Reactions
The announcement immediately sparked mixed reactions in the markets. Nvidia’s stock fell 2.3% in premarket trading, while AMD saw a 1.8% dip. Investors expressed concerns over the long-term profitability of China sales under the new policy, as well as the precedent it sets for future government intervention in private trade.
“This is essentially a pay-to-play model for exports,” said Carla Mendes, senior analyst at TechMarket Insights. “It’s not a tariff, it’s not a tax in the traditional sense — it’s the executive branch directly negotiating corporate revenue shares. That’s new territory.”
Geopolitical and Legal Implications
Trade experts note that the deal could inflame tensions between Washington and Beijing. China has already hinted at possible retaliatory measures, including tightening import regulations for U.S. tech products.
Domestically, legal scholars are questioning whether the executive branch has the constitutional authority to impose such revenue-sharing arrangements without congressional approval.
“While the President has broad powers over export controls for national security, this type of direct revenue extraction is not something we’ve seen before in U.S. trade law,” said Professor Alan Graves of Georgetown University Law Center.
Proponents argue that the measure ensures American taxpayers benefit from lucrative overseas tech sales, especially in a sector where U.S. innovation is a global leader.
“This is a smart deal,” said White House economic adviser Laura Kent. “Rather than letting corporations pocket billions from China while America gets nothing, we’re ensuring that our national interests are financially supported.”
A Shift Toward ‘Command Capitalism’?
The Axios news outlet described the policy as part of Trump’s “command capitalism” approach — a shift from traditional free-market principles toward more centralized, leader-driven economic directives.
Critics warn that such moves could discourage private investment, harm U.S. competitiveness, and invite political favoritism into business decisions.
“This isn’t capitalism as we know it,” said Mendes. “It’s a hybrid where the government takes a cut in exchange for access, which could erode trust in the U.S. as a stable, rules-based market.”
Both Nvidia and AMD are expected to comply with the policy to preserve their access to the Chinese market, which accounts for a substantial share of their global revenue. However, ongoing legal challenges and potential diplomatic fallout could alter the policy’s implementation in the months ahead.
For now, the Trump administration appears committed to this strategy, signaling a broader willingness to leverage U.S. corporate assets in pursuit of geopolitical and economic goals. Trump administration’s new 15% revenue-sharing mandate for AI chip exports to China marks a dramatic pivot in U.S. trade policy. Whether it becomes a model for future government-corporate deals — or a cautionary tale of political overreach — will depend on market response, legal outcomes, and international reaction in the coming months. By Shalom Chidozie for USAfricaLive.com
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