The rift escalated publicly after Treasury Secretary Scott Bessent revealed that several major departments supported trade penalties against Megaspeed months before Commerce acted. The targeted company allegedly used a honeytrap operation to illegally transfer high-end Nvidia hardware directly to China despite existing trade restrictions. Although Lutnick and Nvidia chief Jensen Huang contend that such sales prevent Beijing from developing rival semiconductor ecosystems, congressional committees have ordered closed-door sessions and public hearings with both figures in December.
Key points
The administration remains divided between officials favoring strict semiconductor export…: The administration remains divided between officials favoring strict semiconductor export bans and those promoting sales to maintain Chinese technological reliance.
President Donald Trump maintains complete confidence in Howard Lutnick despite mounting f…: President Donald Trump maintains complete confidence in Howard Lutnick despite mounting friction among cabinet secretaries and bipartisan congressional pressure.
Lawmakers will aggressively escalate oversight into technology leakage through upcoming D…: Lawmakers will aggressively escalate oversight into technology leakage through upcoming December hearings with both Jensen Huang and Howard Lutnick.
Sources checked by our analysis pipeline: 1
TOI correspondent from Washington: For commerce secretary Howard Lutnick, the roadmap for major trade deals was simple: countries like India and Brazil had to be “fixed” to set an example to the world; specifically, PM Modi needed to make a placatory phone call to President Trump; and China needed to be kept dependent on the United States. Except, when it came to selling American AI chips to Beijing, it turns out he was less a hawk and more a dove, like Nvidia's Jensen Huang.
Allegations from Lutnick’s own cabinet colleagues that the US commerce department sat on recommendations from other US agencies to sanction China-linked Megaspeed, now accused of spiriting advanced Nvidia AI chips to Beijing via a honeytrap operation, has suddenly put the commerce secretary’s job on the line. In a stunning development on Thursday, Treasury Secretary Scott Bessent publicly threw Lutnick under the bus, disclosing that the Departments of Treasury, War, USTR, and State were all in favor of putting Megaspeed on the “entity list” for months, “but commerce has the pen.”
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