Economist Slams Trump Administration’s Rumored Move To Tax Nvidia-AMD’s China Chip Revenue As ‘Unconstitutional’

The Trump administration has reportedly negotiated a deal with Nvidia (NVDA) and AMD (AMD) under which the chipmakers would pay 15% of their China revenue to the U.S. government. An economist, however, has shunned a potential move toward this direction as “unconstitutional.”

After Trump tightened the China chip curbs put in place by the Biden administration in April, Nvidia CEO Jensen Huang said in mid-July that the U.S. government has “assured NVIDIA that licenses will be granted.”

A Financial Times report, citing a U.S. official, said on Sunday that Nvidia and AMD have agreed to share 15% of the revenue from the sales of their respective China-specific chips, namely H20 and MI308.

The report hasn’t created a significant impact on the overnight stock prices of these companies. Nvidia stock was down 0.21% compared to a 0.53% pullback by the AMD stock.

The FT report also stated that the Trump administration hasn’t yet determined how to utilize the money. The Commerce Department began issuing export licenses to Nvidia and AMD on Friday, according to a separate FT report. 

The deal terms align with the Trump administration’s recent quid pro quo arrangement, which involves forcing investments in the U.S. in return for tariff reductions, thereby bringing jobs and revenue to America, the report said, citing export control experts.

Nvidia reportedly told the publication that “We follow rules the U.S. government sets for our participation in worldwide markets.”

If the new export curbs had not been put in place by the Trump administration, Bernstein estimates that Nvidia would have generated $23 billion in H20 revenue this year. China has been clamoring for the relaxation of controls on high-bandwidth memory (HBM) chips, which are an essential component for creating advanced artificial intelligence (AI) chips. 

Commenting on the development, economist Peter Schiff said, “This Federal shakedown of private companies is unconstitutional, as are export taxes.”

On Stocktwits, retail sentiment toward Nvidia stock stayed ‘bullish,’ (70/10) by late Sunday, although the message volume was at ‘low’ levels. On the other hand, sentiment toward AMD stock continued to be ‘extremely bullish’ (88/100) and the message volume remained ‘extremely high.’

Shares of Nvidia and AMD have gained 36% and 43%, respectively, for the year.

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