Democrats Launch Nvidia Inquiry, Allege Trump Administration Ran an 'Unconstitutional Export Tax Scheme'
Democratic lawmakers on Thursday opened an inquiry into how the Trump administration handled Nvidia's chip sales to China, escalating a widening controversy that earlier in the day saw the chipmaker oust its CEO, Jensen Huang.
Huang was removed from the company he founded after confessing to an extramarital affair with a woman accused of being a Chinese spy. He has since been accused of additional affairs with Nvidia employees. Separately, Huang has agreed to testify before a different set of Republican-led congressional committees.
The Alleged Scheme
The inquiry comes from Rep. Richard Neal (D-Mass.), the top Democrat on the House Ways and Means Committee, and Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee. As the minority party, they can request information but cannot compel answers.
Their sharply worded letter to Commerce Secretary Howard Lutnick asks the department to preserve records related to an arrangement they describe as both questionable and illegal.
"The scheme worked like this," the letter states. President Trump agreed to permit sales of Nvidia's H200 chips to China on the condition that the chips—manufactured in Taiwan—first be shipped to the United States. Upon arrival, Trump imposed a tariff, which the lawmakers characterize as "effectively taking a cut of Nvidia's sales to China through what appears to be an unconstitutional export tax system." The Commerce Department, under Lutnick, then issued an export license.
The revenue-sharing arrangement itself was public: in August 2025, Nvidia and AMD each agreed to share 15% of their revenue from chip sales to China with the U.S. government as part of a deal to secure export licenses, as the Associated Press reported at the time.
Questions Over Megaspeed and Intelligence Warnings
The letter raises questions about why Lutnick continued to allow Megaspeed—a Singapore-based Nvidia customer—to purchase chips even after he was reportedly informed by U.S. intelligence of suspicions regarding Alice Huang, an executive at the company, and her relationship with Jensen Huang. It also asks why the department reportedly approved other Asian companies to buy Nvidia chips "with no physical presence at their listed addresses."
The inquiry is therefore aimed at the administration, not solely at Nvidia and Huang.
Scrutiny of Nvidia's Donations to Trump Projects
The letter further questions how Nvidia's donations to Trump-backed projects factored into the arrangement. It notes that the export deal was approved after Trump learned of "Mr. Huang's compromised position" and after Nvidia donated $26 million toward Trump's projects, including a ballroom. The implication is that lawmakers are asking whether Trump used his knowledge of the affair to secure donations from Nvidia.
In a "60 Minutes" interview that aired Sunday, Trump mentioned that he and his team had threatened an unnamed AI executive with jail, after which the executive "totally changed."
Second Congressional Probe
This marks the second congressional investigation into Nvidia's China sales and its dealings with Trump since news of the alleged spy affair broke. A Republican-led group—comprising leaders from the House Select Committee on the Chinese Communist Party, the House Committee on Foreign Affairs, and the House Intelligence Committee—has demanded that Huang testify in a closed-door session and threatened to subpoena him if he did not agree voluntarily.
via TechCrunch