Trump Reverses Biden-Era Tech Export Controls: What It Means for US-China Trade Relations

• Why Is the Trump Administration Easing Tech Export Controls?
• How Far Will the US Go in Relaxing Trade Barriers?
• Trump's China Strategy: Transactional Rather Than Ideological
• Trump's 2020 Playbook Revisited
• Historical Precedents and Tech Collaborations
• Frequently Asked Questions

In a significant policy shift, the Trump administration is rolling back tech export controls implemented during the Biden era, allowing companies like Nvidia and AMD to resume sales of certain AI processors to China. This strategic move aims to maintain US technological dominance while keeping Chinese developers dependent on American chips. The decision has sparked debate among lawmakers and analysts, with some viewing it as a pragmatic approach to trade negotiations and others criticizing it as a softening of US stance against China. Below, we break down the implications of this policy pivot and its potential impact on global tech markets.

Why Is the Trump Administration Easing Tech Export Controls?

The Commerce Department recently informed Nvidia Corp. that its H20 AI accelerator, designed for the Chinese market, could soon be back on sale. AMD received similar approval, signaling that exports of more basic AI processors to Chinese developers WOULD now be permitted. Commerce Secretary Howard Lutnick framed this as a calibrated strategy: "The goal is to get Chinese developers 'hooked' on American technology while withholding our most advanced chips." This approach, he argued, safeguards US leadership in chip innovation without arming China with cutting-edge hardware.

Bloomberg reports that this policy could help US companies maintain their commanding position in global markets. "By staying one step ahead in what China can build, we ensure they keep buying our chips," Lutnick stated. However, the move has frustrated legislators advocating a tougher line against China, prompting investigations as TRUMP reportedly prepares for a potential summit with Chinese President Xi Jinping.

How Far Will the US Go in Relaxing Trade Barriers?

Tech investor Kevin Xu, founder of Interconnected Capital and former Obama administration official, suggests the H20 chip restrictions relaxation might lead to broader "tech bargaining." He notes that everything from semiconductor manufacturing tools and rare earth minerals to battery systems, AI processors, and mutual market access could become leverage in US-China negotiations.

Despite these recent easings, the US hasn't moved to dismantle most export restrictions, investment barriers, or sanctions. The 145% retaliatory tariffs - among the highest in modern history - remain largely in place. However, the current administration's stance clearly breaks from previous containment strategies. Earlier discussions in Geneva and London resulted in temporary pauses, with Washington agreeing to reduce certain tariffs and export bans in exchange for rare earth magnets crucial for smartphones, EVs, and advanced defense systems.

Trump's China Strategy: Transactional Rather Than Ideological

Unlike his initial presidency when Trump framed China as a strategic rival, his current approach appears more transactional. He's expressed minimal concern about TikTok's privacy implications and publicly endorsed Chinese automakers setting up production lines in America. As Eurasia Group senior analyst Dominic Chiu observes, "He's not ideologically fixated on having control mechanisms everywhere." This pragmatism suggests Trump may use measures like negotiation chips in discussions about rare earth supplies or other critical assets.

This policy shift forms part of broader diplomatic efforts. Senator Marco Rubio recently met Chinese Foreign Minister Wang Yi in Malaysia, while Treasury Secretary Scott Bessent is expected to meet China's Vice Premier in coming weeks. Bessent has also proposed extending the August 12 deadline for reimposing increased tariffs.

Trump's 2020 Playbook Revisited

Trump's current objectives mirror his 2020 strategy: pushing China to make large purchases of US goods to reduce the trade deficit, cracking down on fentanyl precursor exports, negotiating terms for TikTok's US operations, and securing assurances against weaponizing rare earth minerals. He's even floated the idea of allowing Chinese capital into the US to help correct trade imbalances.

Conversely, Chinese leadership seeks rollbacks of US tariffs - particularly the 20% duties on fentanyl-related items and other permanent measures from Trump's previous term - along with eased investment restrictions and additional export control relaxations.

Historical Precedents and Tech Collaborations

This isn't the first time governments have partnered with tech firms on strategic initiatives. In 2024, the Danish government collaborated with the Novo Nordisk Foundation to build an NVIDIA-powered AI supercomputer assisting pharmaceutical researchers in drug discovery and clinical trial optimization.

As the US and China navigate this complex trade relationship, the tech sector remains a critical battleground. The coming months will reveal whether Trump's calibrated approach can balance technological protectionism with economic pragmatism.

Frequently Asked Questions

What specific tech exports is the Trump administration allowing?

The administration is permitting sales of certain AI processors to China, including Nvidia's H20 accelerator and AMD's more basic AI chips, while maintaining restrictions on advanced technologies.

How does this policy differ from Biden's approach?

While the Biden administration emphasized stricter tech export controls to limit China's technological advancement, the Trump administration is adopting a more nuanced strategy of allowing certain exports to maintain market dominance.

What are the potential risks of this policy shift?

Critics argue it could accelerate China's tech development and reduce long-term US competitive advantages, while supporters believe it maintains economic leverage and prevents complete decoupling.

How might this affect US tech companies?

Companies like Nvidia and AMD stand to benefit from regained access to the Chinese market, though they'll need to navigate evolving regulations and geopolitical tensions.

What's the timeline for these changes?

The policy adjustments are already being implemented, with further developments expected as US-China negotiations progress through 2025.