SAN JOSE, CA – MARCH 18: Nvidia CEO Jensen Huang delivers a keynote speech during the Nvidia GTC artificial intelligence conference at the SAP Center on March 18, 2024 in San Jose, California. The developer conference is expected to showcase new chips, software and AI processor technology. (Photo by Justin Sullivan/Getty Images)
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Nvidia co-founder Jensen Huang has been a very positive influence on President Trump. The same person who has long said that the word “tariff” is one of the most beautiful words in the English language is hearing more and more of the free trader in Huang.
Huang has made the crucial point that “if we can grow economically, we will be strong militarily.” Trump seems to agree, as evidenced by his recent decision to allow Nvidia to export its H200 chip to China. On the industrial policy qualities of Trump’s actions, along with the 25% cut in sales the US Treasury will receive, more on both in a moment.
For now, Trump’s decision is a step in the right direction. It makes the US and China safer. Countries that trade together enrich each other. In other words, if China and the US really wanted to weaken each other economically, and by extension militarily, they would not trade at all.
Just the same, bartering between producers in different countries is easily the greatest foreign policy ever to happen to humanity, precisely because it makes war of the shoot, bomb, maim kind prohibitively expensive. Rare is the citizen or nation willing to put guns or bombs on a country full of buyers of its products.
From there, we need to consider the practical implications of Nvidia’s sale to China. The argument made by the Biden and Trump administrations in the past was that the chip sales amounted to a transfer of technology to China at the expense of the economy and security. The argument failed twice, and realistically several times.
On the technology front, there is no reason for the ultimate destination of any good being sold. This means that once a product is on the market, the competition sees it, picks it out, studies it, and buys it if they choose. Embargoes are symbolic, nothing more. Applied in China, the chip sales ban will not prevent Chinese competition from seeing Nvidia chips, but it will prevent Nvidia from maintaining and gaining market share in the Chinese market. Only for the story to get worse.
The US government’s barriers to Nvidia chip sales in China don’t just weaken Nvidia from a market share perspective, but also from an evolutionary sense. Great businesses don’t just lead their customers, they learn from them. Chinese innovation will certainly be big in the future of AI, thus making it counterproductive to tend the commercial face of American AI from one of the most important AI markets.
The above becomes especially dangerous considering the basic truth that Huawei and other companies within China intend to sell to businesses that US politicians would not have previously allowed Nvidia to sell to. Better to let American companies like Nvidia compete. President Trump seems to agree.
Is the deal perfect? Obviously not. The production and sale of this production must not be the result of a license granted from the proverbial Commanding Heights.
After that, Huang observed that “if we don’t reinvent ourselves and open up the canvas for the things we can do,” “we will be destroyed into commodities.” Consider Nvidia’s relentless need to improve with the 25% cut the US Treasury will take on chip sales to China. The 25 percent represents investment that Nvidia has given up on itself.
Still, the deal with President Trump represents progress. Thanks to it, Nvidia will grow and learn in a critical market, the American and Chinese people will be safer from the billions in trade it represents, and most exciting of all, the deal signals the growing influence of a free trader in Jensen Huang on a president who, as the deal attests, is willing to convince.
