US government to take 25% cut of AMD, NVIDIA AI sales to China

In a bold move, President Donald Trump has unveiled a new tariff structure targeting AI processors from Nvidia and AMD sold to China, asserting a 25 percent cut on these sales. This initiative is part of an unusual arrangement aimed at allowing these tech giants to export their advanced chips while simultaneously generating revenue for the U.S. government. The White House had previously granted Nvidia permission to ship its H200 chips to China, reversing earlier restrictions on the export of high-performance AI hardware. However, this approval came with the stipulation that the government would receive a significant percentage of the sales revenue. On Wednesday, the administration announced new tariffs specifically designed to enforce this financial agreement and safeguard it against potential legal challenges, as stated by various industry executives. "We’re going to be making 25 percent on the sale of those chips, basically. So we’re allowing them to do it, but the United States is getting 25 percent of the chips in terms of the dollar value. And I think it’s a very good deal," Trump remarked during a press briefing in the Oval Office. According to a White House factsheet, the tariff will apply to specific chips, including Nvidia’s H200 and AMD’s MI325X, that are first imported into the U.S. and then exported globally. This policy extends to other American companies looking to send their AI chips overseas. Both Nvidia and its competitors predominantly depend on Taiwan Semiconductor Manufacturing Company for the fabrication of their chip designs, including the H200, which represents an earlier generation of Nvidia’s technology. Notably, chips imported to support the development of domestic AI infrastructure will be exempt from this new tariff, as clarified in a presidential proclamation issued on the same day. These tariffs form part of a broader national security investigation initiated by the Trump administration last year, coinciding with the commencement of a trade conflict with key U.S. partners, which has caused significant disruptions in global markets. This approach, known as Section 232 tariffs, is based on a different legal framework than the emergency powers previously used by Trump for other international trade measures, which are currently facing scrutiny from the Supreme Court.