Congressional Democrats open inquiry into Nvidia chip sales to China, calling tariff arrangement an “unconstitutional export tax”

Two senior congressional Democrats opened an inquiry on Nov. 12 into Nvidia’s exports of advanced artificial intelligence chips to China, writing to Commerce Secretary Howard Lutnick and demanding that he preserve all records related to the export decisions. The letter questions an arrangement under which the Trump administration approved sales of H200 chips to China, which the lawmakers describe as effectively an unconstitutional export tax dressed up as a tariff, and asks why the Commerce Department kept approving the deals after receiving intelligence warnings.

How the arrangement described in the letter works

According to the letter and several news reports, the arrangement works like this: Taiwan-made H200 chips are first shipped to the United States, where they undergo a security review and the Commerce Department issues an export licence before they are sent on to China; a 25% tariff is collected when the chips enter the United States. Sen. Ron Wyden and Rep. Richard Neal wrote that this lets the government take a share of Nvidia’s sales to China through “what appears to be an unconstitutional export tax system.” The letter also says Jensen Huang and Nvidia directed at least $26 million toward President Trump’s personal priorities, including the White House ballroom project, and questions whether political considerations improperly influenced export policy. Those claims are the lawmakers’ allegations in the letter, not findings of an investigation.

Megaspeed and the spy allegation

The other focus of the inquiry is Megaspeed, a Singapore-based company US officials suspect of helping route advanced Nvidia chips into China, with reported purchases of more than $4 billion. One of its executives, Alice Huang, is alleged to be a Chinese spy. The Justice Department’s national security division is investigating whether Megaspeed violated export control laws; the Commerce Department’s Bureau of Industry and Security began investigating the company in 2024 and later handed the case to the Justice Department. Wyden and Neal questioned why Lutnick continued to allow Megaspeed purchases after being told of US intelligence suspicions about Huang.

A minority-party inquiry has limited power

Wyden is the top Democrat on the Senate Finance Committee and Neal is the top Democrat on the House Ways and Means Committee. As members of the minority party, they can ask questions but cannot compel answers; the letter mainly demands that records be preserved and warns that destroying records relevant to a congressional investigation can be a federal crime. Separately, House Foreign Affairs Committee chair Brian Mast, a Florida Republican, wrote to Jeff Kessler, undersecretary of commerce for industry and security, seeking a Dec. 2 hearing on chip smuggling and “reported interference by private companies into export control policies and enforcement investigations.”

Background: Huang’s resignation and the 15% revenue deal

The inquiry comes against the backdrop of Nvidia co-founder Jensen Huang stepping down as chief executive on Nov. 12. Huang had long argued for looser controls on chip exports to China. In August 2025, Nvidia and AMD agreed to give the US government 15% of their revenue from chip sales to China in exchange for export licences. The Commerce Department did not immediately respond to a request for comment.

(Sources: The Associated Press; TechCrunch; Northern Herald.)