Trump Approves Curbs to Counter Suspected Diversion of Nvidia Chips to China, Despite Trade War Warning
Key Facts
U.S. President Donald Trump approved moving ahead with restrictions targeting the suspected diversion of Nvidia chips to China, according to an Axios report published on November 11. The report said Trump called his adviser Elon Musk in the Oval Office before approving the move. Musk backed the position of Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer and Defense Secretary Pete Hegseth, who supported imposing the restrictions. Commerce Secretary Howard Lutnick, by contrast, warned that the move "would start a trade war with China." The report places the decision at the center of an administration dispute over enforcement of export controls on advanced chips.
According to Axios, a meeting in the White House Situation Room saw a confrontation between Bessent and Lutnick over the Commerce Department's resistance to export restrictions, particularly those involving Megaspeed. The department denied that the conversation took place, and spokeswoman Kristen Aikemeyer said: "That is not true. No such conversation took place between Secretary Bessent and Secretary Lutnick." The denial means the account of a confrontation remains attributed to the report, while the department explicitly disputes it. The report did not announce an effective measure against the company following the presidential approval. The announced step remains a directive to act against suspected diversions, pending any subsequent formal action.
Axios said Trump approved action on suspected diversions in May and August, and then on November 5. These three references, alongside the description of the latest approval as the year's third authorization, are included without the report explaining how the dates align with that description. The account does not establish whether the earlier references concerned the same stages or separate actions. The report therefore confirms that the administration discussed action against suspected diversions on those occasions. The repeated reported approvals reflect an ongoing dispute within the administration over how tightly to control chip access to China.
As part of congressional oversight, Senator Michael Bennet asked the Commerce secretary, attorney general, secretary of state and director of national intelligence to provide information on the Megaspeed investigation by November 24, 2026. His requests include details of coordination with Singapore, Malaysia and Indonesia on potential export-control violations, as well as measures the administration might take, including adding the company to the Entity List. Bennet's letter said the Commerce Department's Bureau of Industry and Security led the investigation initially. It added that media reports indicate the Justice Department is now leading it, wording that attributes the leadership change to those reports and does not independently confirm it. The senator also asked for clarification on which agency is handling the investigation and what steps the administration is considering.
The move comes amid an export policy that allows some applications to be reviewed on a case-by-case basis. On January 13, 2026, the Commerce Department announced that the Bureau of Industry and Security would review export applications for Nvidia H200, AMD MI325X and similar chips to China case by case, subject to security requirements including protecting supplies for U.S. customers, screening buyers and independently testing the product in the United States. Under Secretary of Commerce for Industry and Security Jeffrey Kessler said export controls should "evolve as technology changes, while protecting national security." He added that allowing H200 sales to China "under controlled conditions will strengthen the U.S. technology ecosystem." Axios reported that the administration approved sales of older H200 chips to China subject to a 25% tariff, in a track separate from the confrontation over unauthorized diversion.
In a separate case, the Justice Department said defendants conspired to divert U.S. servers containing artificial intelligence technology to China without a Commerce Department license, and that neither the defendants nor the U.S. manufacturer had obtained a license to export or re-export the servers. The indictment said the intermediary company bought servers worth about $2.5 billion between 2024 and 2025, and that at least about $510 million worth were diverted to China between late April and mid-May 2025. The department said the defendants concealed the servers' destination by repacking them in unmarked boxes and prepared thousands of fake, nonfunctional servers to mislead compliance teams during inspections. These facts remain allegations in the indictment, and the defendants are presumed innocent unless proven guilty. The available evidence does not link this separate case to the Megaspeed investigation.
In the market, Nvidia shares rose 2.9% in Wednesday's session on November 11, according to an Associated Press report. CoreWeave shares jumped 24.7% after the company reported a smaller-than-expected summer loss and raised its annual revenue forecast above analysts' estimates. CoreWeave's chief executive said the company expects about $9 billion in customer prepayments and deposits over the following three months. Nvidia shares also closed at $173.73 on November 11, compared with $168.89 the previous day, according to EL7 daily data. The next specified deadline in the oversight process is November 24, when administration officials are due to respond to Bennet's request.