Trump Agrees to Move Against Suspected Diversion of Nvidia Chips to China Amid Rift Within His Administration
Key Facts
U.S. President Donald Trump agreed to move against companies suspected of diverting Nvidia chips to China, according to a report published by Axios on 11 November 2026. The approval came during a White House meeting on export controls and the case of Megaspeed, which the report described as being at the center of an espionage scandal. But the action had not been implemented by the time the report was published, after Commerce Secretary Howard Lutnick proposed preparing options and returning with them later. That puts the policy decision up against a question of implementation: whether the Commerce Department will impose controls on the company that sparked the case. The move targets companies suspected of diverting the chips and does not in itself mean tighter restrictions directly on Nvidia exports.
The Situation Room meeting included Lutnick, Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, U.S. Trade Representative Jamieson Greer and Secretary of State Marco Rubio. According to Axios, Bessent confronted Lutnick over his department’s resistance to enforcing export controls, particularly in relation to Megaspeed. The report said the group backed Bessent’s position on the issue. The attendees moved to the Oval Office at around 5 p.m., where Trump said, "Let's make it happen," according to Axios. Lutnick then proposed preparing options and returning with them, while the report said implementation had not taken place at the time of publication.
The dispute centered on the cost of imposing controls on trade relations with China. Axios quoted Lutnick as warning that imposing restrictions "will start a trade war with China." By contrast, Elon Musk supported the position of Rubio, Bessent, Greer and Hegseth in favor of imposing controls, the report said. Megaspeed emerged in the discussion as the company at the heart of the case, amid allegations that it diverted Nvidia chips to China. The differing positions within the administration reflect a trade-off between preventing technology from reaching suspected parties and the possibility of a trade escalation with Beijing.
Commerce Department spokesperson Kirsten Eickheimer said the account of a confrontation between Bessent and Lutnick was inaccurate and denied that they had had that conversation. Axios quoted her as saying, "That is not true. No such conversation took place between Secretary Bessent and Secretary Lutnick." The report noted that the department did not immediately comment on the other allegations. The denial contrasts with Axios's account of the meeting and its discussion of enforcing export controls on Megaspeed. The denial itself did not say whether the department would adopt the action Trump approved or when it would act.
Axios says Trump's approval to take action against suspected diversions preceded the November meeting: he agreed to move in May and August, and then on 5 November 2026. But Lutnick and Under Secretary of Commerce Jeffrey Kessler resisted pressure to move forward, according to the report. In the background to export policy, the administration announced the previous year that it would ease restrictions on sales of Nvidia H200 chips to China in exchange for a 25% tariff, according to Axios. On 13 January 2026, the Commerce Department said the Bureau of Industry and Security would review export applications for Nvidia H200 and AMD MI325X chips to China on a case-by-case basis, subject to security requirements. The conditions included ensuring that production capacity available to U.S. customers was not reduced, that the Chinese buyer adopted compliance and customer-screening procedures, and that the chips underwent independent testing in the United States.
In the investigation, The Associated Press reported that the Justice Department had received the Commerce Department's investigation into Megaspeed, and that its National Security Division was investigating whether the company had violated export control laws. Senator Michael Bennet also asked U.S. officials for an update on the investigation into the company. Bennet urged the United States to engage with Singapore, Malaysia and Indonesia over potential violations and to consider punitive measures against Megaspeed, including placing it on the Entity List. He asked Commerce Secretary Lutnick, Attorney General Pam Bondi, Secretary of State Rubio and Director of National Intelligence John Ratcliffe to provide the information in writing by 24 November 2026. That deadline puts the investigation and possible measures at the center of the case's next developments.