Apple CEO Tim Cook visited the White House bearing an unusual gift. “This box was made in California,” Cook reassured his audience in the Oval Office this month, as he took off the lid.
Inside was a glass plaque, engraved for its recipient, and a slab for the plaque to sit on. “The base was made in Utah, and is 24-karat gold,” said Cook.
Donald Trump appeared genuinely touched by the gift.
But the plaque wasn’t Cook’s only offering: Apple announced that day it would invest another $100bn in US manufacturing.
The timing appeared to work well for Apple. That day, Trump said Apple would be among the companies that would be exempt from a new US tariff on imported computer chips.
The Art of the Deal looms large in the White House, where Trump is brokering agreements with powerful tech companies – in the midst of his trade war – that are reminiscent of the real estate transactions that launched him into fame.
But in recent days, this dealmaking has entered uncharted waters.
Two days after Cook and Nvidia CEO Jensen Huang had a closed-door meeting with Trump at the White House. The president later announced Nvidia, along with its rival Advanced Micro Devices (AMD), will be allowed to sell certain artificial intelligence chips to Chinese companies – so long as they share 15% of their revenue with the US government.
It was a dramatic about-face from Trump, who initially blocked the chips’ exports in April. And it swiftly prompted suggestions that Nvidia was buying its way out of simmering tensions between Washington and Beijing.
Trade experts say such a deal, where a company essentially pays the US government to export a good, could destabilize trading relations. Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics, said that it creates “the perception that export controls are up for sale”.
“If you create the perception that licenses, which are supposed to be determined on pure national security grounds, are up for sale, you potentially open up room for there to be this wave of lobbying for all sorts of really, dangerous, sensitive technologies,” Chorzempa said. “I think that’s a very dangerous precedent to set.”
Though the White House announced the deal, it technically hasn’t been rolled out yet, likely because of legal complications. The White House is calling the deal a “revenue-sharing” agreement, but critics point out that it could also be considered a tax on exports, which may not be legal under US laws or the constitution.
The “legality” of the deal was “still being ironed out by the Department of Commerce”, White House press secretary Karoline Leavitt told reporters this week.
Nvidia and AMD’s AI chips are at the heart of the technological arms race between the US and China. Nvidia, which became the first publicly traded company to reach a $4tn valuation last month, creates the essential processing chips that are used to run and develop AI.
The US government has played a role in this arms race over the last several years, setting regulations on what AI chips and manufacturing equipment can be sent to China. If China has less computing power, the country will be slower to develop AI, giving a clear advantage to the US.
But despite the restrictions, China has been catching up, raising questions on how US policy should move forward.
“They haven’t held them back as far as the advocates had hoped. The US has an enormous computing advantage over China, but their best models are only a few months behind our best models,” Chorzempa said. For US policymakers, “the question they’ve had to grapple with is: Where do you draw the line?”
The AI chips Nvidia and AMD can now sell to China aren’t considered high-end. While they can be used for inference on trained models, they aren’t powerful enough to train new AI models. When announcing the deal with Nvidia and AMD, Trump said the chip is “an old chip that China already possesses … under a different label”.
This is where a major debate on AI policy comes in. Those who take a hardline stance on the US’s relationship with China say that allowing Chinese companies to purchase even an “old chip” could still help the country get an advantage over the US. Others would say a restriction on such chips wouldn’t be meaningful, and could even be counterproductive.
To balance these two sides, the Trump administration is asking companies to pay up in order to export to China – a solution that people on both sides of the AI debate say is a precarious one.
“Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance AI capabilities,” said John Moolenaar, a Republican US representative from Michigan, in a statement.
But Trump’s gut-reaction to dealmaking seems focused on the wallet. On Wednesday, US treasury secretary Scott Bessent praised the arrangement and suggested it could be extended to other industries over time. “I think that right now this is unique, but now that we have the model and the beta test, why not expand it?” he told Bloomberg.
Julia Powles, executive director of the Institute for Technology, Law and Policy at the University of California, Los Angeles, said the deal opens up questions of whether similar pressure can be applied to other tech companies.
“What other quid pro quo might be asked in the future? The quid pro quo that would be of great concern to the [tech] sector is anything that reduces their reputation for privacy and security,” Powles said. “That’s thinking of government like a transactional operator, not like an institution with rules about when, how and for what it can extract taxes, levies and subsidies.”
But that seems to be how the White House runs now. When explaining to the press how he made the deal, Trump said he told Huang: “I want 20% if I’m going to approve this for you”.
“For the country, for our country. I don’t want it myself,” the president added. “And he said, ‘Would you make it 15?’ So we negotiated a little deal.”
