'Shakedown': Chip Giants to Pay Trump Admin 15% of Revenue From China Sales in 'Unprecedented' Deal​

In a deal that is being called "unprecedented," two computer chip manufacturers have agreed to give the United States government 15% of their revenues from exports to China.

The Financial Times reported Sunday that Nvidia and AMD "agreed to the financial arrangement as a condition for obtaining export licenses for the Chinese market that were granted last week, according to people familiar with the situation, including a U.S. official."

For months, the Trump administration had been blocking these computing giants from exporting their most advanced computer chips to China, including Nvidia's coveted H2O chips, which are used to develop artificial intelligence—a move applauded by the administration's China hawks.

But that blockade was apparently broken this past Wednesday when Jensen Huang, Nvidia's CEO, visited the White House on Wednesday to cut a deal with President Donald Trump.

It is not clear at this moment how the Trump administration intends to use the money, but experts told FT that such a "quid pro quo arrangement" lacks any peer in recorded history, as "no U.S. company has ever agreed to pay a portion of their revenues to obtain export licenses."

Columnist James Thomson noted the peculiarity of the deal in Australia's Financial Review magazine, referring to it as the latest "shakedown" by the Trump administration of corporations seeking its favor:

What we've seen in the past week has been extraordinary. First, Apple chief executive Tim Cook comes to the Oval Office to kiss the ring after Trump threatened to smash iPhones sales with huge tariffs earlier this year; Cook agreed to invest $US600 billion in U.S. infrastructure and even gave Trump a 24-carat gold gift in an excruciatingly awkward exchange.

A few days later, Trump suggested the chief executive of Intel, Lip-Bu Tan, was "conflicted" because of his ties to Chinese business. With Tan reportedly set to visit the White House on Monday night, the pattern looks pretty clear: Trump threatens to hurt a business in some way, and the business does a deal to get back in his good graces.

Is that the art of the deal, or the sort of rubbish you expect from backward authoritarian regimes?

The arrangement is also potentially unconstitutional, as Article I, Section 9 of the U.S. Constitution explicitly forbids the levying of export taxes.

But while the contours of this specific deal are unusual, the philosophy behind it is quintessential to how the Trump administration has operated over the past seven months.

Trump has applied similar tactics to his trade war with the rest of the world, stating plainly that countries have "given" the United States money in exchange for lower tariffs.

As part of the agreement made in July, Trump described in a CNBC interview receiving "a signing bonus from Japan of $550 billion—that's our money. It's our money to invest, as we like." Secretary of Commerce Howard Lutnick described Japan as a "financier and banker" that would pour money into projects at Trump's discretion.

His deal with the European Union has similar contours, with the E.U. agreeing to purchase $750 billion worth of American energy along with the vague promise to "invest" another $600 billion in the United States.

Bulwark and MSNBC commentator Sam Stein noted the opacity of these deals in a post on X: "Where is it going? To our Treasury? How is the [White House] saying it will account for it? Not minor details."

William Aceves, a law professor at the California Western School of Law, described Nvidia and AMD's deal as the most recent form of corporate capitulation to the Trump administration in comments to The Washington Post.

"We have already seen many situations where entities—including corporations, universities, and law firms—would rather accept hefty fines or settle lawsuits than challenge the administration in court. And, significantly, this has occurred even in cases where the administration's actions or allegations have little merit," he said. "It would appear that this is the cost of doing business with the administration."