Trump Rolls Back Biden-Era Tech Export Controls: A Strategic Shift in US-China Trade Relations
- Why Is the US Easing Chip Export Controls Now?
- Could This Lead to a Broader Tech Deal?
- Trump’s Transactional Approach vs. Biden’s "Small Yard, High Fence"
- What Does China Want in Return?
- FAQ: Unpacking the US-China Tech Trade Shift
In a surprising pivot, the Trump administration is easing key technology export restrictions to China, signaling a potential thaw in trade tensions. Nvidia and AMD have received green lights to sell certain AI processors to Chinese developers, while Commerce Secretary Howard Lutnick defends the move as a way to make China "addicted" to US tech without handing over cutting-edge innovations. This calibrated approach has drawn criticism from China hawks but aligns with Trump’s transactional playbook ahead of a possible summit with Xi Jinping. Below, we unpack the implications of this policy shift, the broader diplomatic maneuvers, and what it means for the future of US-China economic relations.
Why Is the US Easing Chip Export Controls Now?
The Commerce Department recently notified Nvidia Corp. that its H20 AI accelerator—a chip designed specifically for the Chinese market—could soon resume sales there. AMD received similar clearance, allowing exports of lower-tier AI processors to Chinese developers. According to Secretary Howard Lutnick, the goal is twofold: hook Chinese developers on US technology while withholding "our best stuff" to maintain America’s innovation edge. "We want them dependent on our chips, not our blueprints," he quipped in a Bloomberg interview. This strategy, however, has ruffled feathers among lawmakers advocating a harder line against Beijing, with some calling for investigations into the timing of the move as TRUMP prepares for potential talks with Xi.
Could This Lead to a Broader Tech Deal?
Tech investor Kevin Xu, founder of Interconnected Capital and a former Obama administration official, sees the relaxed H20 chip restrictions as a precursor to a larger "tech bargain." He suggests everything from semiconductor manufacturing tools and rare earth minerals to AI processors and reciprocal market access could be on the table. "This is about leverage," Xu notes. "China holds rare earths; we hold advanced chips. It’s a high-stakes poker game." Despite the loosening, the US hasn’t budged on most export bans, investment barriers, or retaliatory tariffs—some as high as 145%—originally imposed to force China to the negotiating table. Recent talks in Geneva and London yielded a temporary truce, with Washington agreeing to trim some tariffs in exchange for vital rare earth magnets used in smartphones, EVs, and defense systems.
Trump’s Transactional Approach vs. Biden’s "Small Yard, High Fence"
Trump’s first term framed China as a strategic rival but embraced deal-making over ideology. He famously shrugged off TikTok’s privacy concerns and welcomed Chinese automakers setting up US factories. As Eurasia Group’s Dominic Chiu observes, "Trump isn’t obsessed with controls everywhere. If he can trade chips for rare earths, he will." This contrasts sharply with Biden’s targeted restrictions on critical technologies. Rand’s Gerard Dipippo adds, "If anyone’s willing to swing big on economic levers, it’s Trump." The administration’s recent diplomatic push—including Marco Rubio’s meeting with China’s Foreign Minister Wang Yi and Treasury Secretary Scott Bessent’s planned talks with Vice Premier He Lifeng—hints at a broader reset. Bessent even floated extending an August 12 deadline to reimpose steep tariffs.
What Does China Want in Return?
Beijing seeks reversals of Trump-era tariffs, including 20% duties on fentanyl-related goods, eased investment curbs, and further export control relief. Meanwhile, Trump’s demands include massive purchases of US goods to narrow the trade gap, crackdowns on fentanyl precursor exports, and guarantees against weaponizing rare earths. He’s also floated allowing Chinese capital to Flow into US markets as a trade-balancing tool. The stage is set for a high-wire negotiation, with both sides eyeing October’s Asia-Pacific economic cooperation summit in South Korea as a potential venue for breakthroughs.
FAQ: Unpacking the US-China Tech Trade Shift
Why did the US relax AI chip exports to China?
The Trump administration aims to keep Chinese developers reliant on US technology while denying them top-tier innovations, a strategy Commerce Secretary Lutnick calls "addiction without armament."
Could this lead to a larger US-China trade deal?
Analysts like Kevin Xu believe chip restrictions could be bargaining chips for broader negotiations covering rare earths, market access, and semiconductor equipment.
How does Trump’s approach differ from Biden’s?
Trump favors transactional leverage (e.g., trading chips for rare earths), while Biden’s "small yard, high fence" policy focuses on narrowly restricting critical technologies.
What are China’s key demands?
Beijing wants tariffs lifted, investment barriers eased, and export controls relaxed—particularly on high-tech goods linked to its manufacturing ambitions.