Lutnick Took a Softer Line on Nvidia as Calls for Tougher Controls Grew

There is broad agreement among most senior Trump administration officials that the United States should more aggressively tighten controls on Nvidia’s advanced chips to keep China from using them to catch up in the race to dominate artificial intelligence.

Then there is Howard Lutnick, who runs the Commerce Department.

Over the past year, Mr. Lutnick has frequently clashed with top officials over how to regulate sales of advanced technology, particularly Nvidia’s chip sales to Asia. That has drawn accusations from others in the administration and in Congress that the Commerce Department has become too cozy with Nvidia and its co-founder, Jensen Huang, and failed to adequately police the firm’s chip sales to China, in particular.

The issue has exploded into public view in recent weeks with the revelations from The New York Times that Nvidia’s chief executive, Jensen Huang, was in a relationship with a woman believed by U.S. intelligence agencies to be a Chinese spy. The woman, Alice Huang, was a top executive at a Singapore-based company, Megaspeed, that is suspected of smuggling Nvidia chips to China. On Thursday, Mr. Huang announced that he was stepping down from the company, sending the company’s shares tumbling.

The astonishing developments have thrust Mr. Lutnick into an uncomfortable spotlight and raised questions about whether he went too far in protecting Nvidia’s interests. And it has focused attention on whether the influence of Mr. Huang, an ally of President Trump’s and among the most high-profile and successful of American business leaders, kept the United States from moving faster to clamp down on sales of Nvidia chips to companies like Megaspeed.

The stakes in the A.I. race between the United States and China are high. China hawks warn that allowing sales of advanced chips to that country is speeding its A.I. development and giving it an economic and military edge. Those who support the sales say they help U.S. technology maintain global leadership, while deterring China from developing rival products. As the head of a sprawling department that has control over enforcing restrictions on technology sales, Mr. Lutnick is best positioned to single-handedly shape whether China has access to American technology, including Nvidia’s.

Within the Commerce Department, Nvidia is treated differently than other firms, current and former officials say, with its issues given high priority and sent through specific channels.

Mr. Lutnick frequently calls and messages with Mr. Huang, and the department prepares carefully for their private meetings together in Mr. Lutnick’s fifth floor office. All Nvidia matters are routed through Jeff Kessler, a top deputy to Mr. Lutnick, who is said to rarely take any significant action without the commerce secretary’s approval.

Nvidia’s general counsel has also been given direct access to shape new rules, including leaving comments in draft regulations affecting the company.

Nvidia’s general counsel, Tim Teter, is known within the Commerce Department for his aggressive outreach. An inquiry inside the agency into whether Megaspeed was smuggling Nvidia chips into China was shut down late last year and transferred to the Justice Department after Mr. Teter reached out directly to Commerce Department investigators, invoking Mr. Kessler’s name in doing so.

Mr. Trump’s close relationship with Mr. Huang has also made department officials wary of taking aggressive steps to rein in sales of Nvidia chips, out of concern about angering Mr. Lutnick or the White House, according to interviews with current and former officials and others familiar with the policies, who discussed internal deliberations on the condition of anonymity.

In the wake of the revelations about Mr. Huang, the frictions within the administration about how to deal with Nvidia’s interests erupted last week. Treasury Secretary Scott Bessent confronted Mr. Lutnick during a White House meeting over his handling of Megaspeed, demanding to know why the United States had not already banned chip sales to the company.

Mr. Lutnick responded that new measures could be put in place soon.

A spokeswoman for the Commerce Department denied that the interaction happened and said that the department had worked in concert with other agencies to issue export controls. She also denied that Mr. Trump’s relationship with Mr. Huang had put a chill on the department’s actions, calling the idea “false and reckless.”

The spokeswoman, who declined to be named, said the department had charged defendants in multiple major criminal investigations targeting billions of dollars of chip smuggling, and imposed a license requirement on Nvidia’s H20 chip, unlike the Biden administration.

Nvidia declined to comment. The White House did not respond to a request for comment.

An impediment to the rules

The Commerce Department has not always been so cautious on export controls. In Mr. Lutnick’s confirmation hearing in January last year, he promised to take a tough stance on oversight of technology sales to China.

“We need to stop helping them,” he said, referring to China’s progress in A.I. “I’m going to be very strong on that.”

But his critics say he has since been described as one of the biggest impediments to tighter rules.

Mr. Bessent, Secretary of State Marco Rubio and Trade Representative Jamieson Greer have all had concerns about the sale of Nvidia’s advanced chips to China and have pushed for tighter restrictions.

But Mr. Lutnick has repeatedly delayed or deferred technology controls, slowing down efforts throughout the year, according to people who described the discussions.

In October, a few weeks before the midterm elections, some top officials in the Trump administration hoped to move forward with sweeping rules that would restrict Chinese companies from access to A.I. computing power in Southeast Asia, what some view as a major loophole in U.S. technology restrictions.

While the United States still bars the most advanced chips from being exported directly to China, Chinese companies have been able to gain access to them freely by remotely logging on to data centers in Southeast Asia. This is the business that Megaspeed, the Singaporean firm that was led by Ms. Huang, is engaged in.

The Biden administration issued regulations in January 2025 to clamp down on this issue, known as remote access, but the Trump administration rolled them back shortly after coming into office. Since then, officials have sparred over what to replace them with.

Both the State and Treasury Departments were in favor of moving forward with restrictions. The president had also signed off on the proposal.

Trump officials had just approached Oracle, which operates data centers in Southeast Asia, to try to dissuade it from pursuing a $7 billion deal to lease advanced chips to the Chinese company Tencent. Oracle agreed to cancel the deal, but told officials that its competitors were continuing to provide America’s most advanced computing power to Chinese companies.

Mr. Trump knew the step would affect Nvidia and Mr. Huang, but he had the support of most of his government advisers, as well as Elon Musk of Tesla and Mark Zuckerberg of Meta.

Then Mr. Kessler weighed in, saying that Mr. Lutnick had substantial policy issues with the idea. And Mr. Lutnick told his colleagues that he didn’t understand the rush.

The regulation was a serious issue that would impact other countries, as well as Nvidia, Mr. Lutnick said. He stressed to the team of Susie Wiles, then the White House chief of staff, that he believed any new action would instigate a further trade war with China and that he needed to have additional discussions with the president.

The Commerce Department spokeswoman said that the department was actively considering new rules to address remote access, along with other agencies.

Howard Lutnick’s evolution

The frustrations about Mr. Lutnick’s position on export controls are part of a larger battle between the commerce secretary and many others in the Trump White House and cabinet that dates to the presidential transition in late 2024. Mr. Lutnick led the effort, and his approach — seen by his internal critics as heavy-handed — earned him few fans.

Mr. Lutnick pushed aggressively to eclipse Mr. Bessent and become Mr. Trump’s Treasury secretary, at times irritating Mr. Trump in the process.

Mr. Lutnick has had a long relationship with Mr. Trump dating to their days in New York and has proved himself willing to do whatever he thinks Mr. Trump wants, including fighting to put the president’s name on the Kennedy Center and donating $25 million to the future Trump presidential library when his own standing was shaky.

A former bond trader with no government experience, Mr. Lutnick initially deployed the export control powers of his department aggressively, though erratically, on several occasions last year. Those moves prompted harsh reactions from China, upset ongoing trade negotiations and prompted criticism from other top officials.

In September last year, the Commerce Department issued a sweeping rule that added tens of thousands of Chinese companies to the “entity list,” which restricts American companies from exporting products to any company on the list unless they obtain a license from the government to do so. China responded swiftly, by cutting off the supply of rare earth minerals to the United States, which threatened to shutter American factories making cars, tools and other products.

The administration started receiving panicked calls from chief executives, and officials quickly agreed to suspend the rule as part of a trade pact with China. Mr. Lutnick’s employees were then asked to write a short summary for him on what the entity list is.

People familiar with those incidents say Mr. Lutnick was chastened by the blowback. Since then, the department has essentially halted new technology controls against China, concerned that any measures would upset a fragile truce. The department has not issued any entity listings in over a year, the longest stretch of time without an update in 18 years.

Mr. Lutnick’s defenders have repeatedly argued that when it came to Nvidia, he was doing what the president wanted. One person who witnessed a number of discussions about chips policy and Nvidia, who discussed internal deliberations on the condition of anonymity, said that the president was more often than not the person most sympathetic to Mr. Lutnick’s position. Mr. Trump, another official said, wanted to have a good relationship with President Xi Jinping of China.

A third person said the relationship between Mr. Huang and Mr. Lutnick was not always pleasant, including when the commerce secretary took actions that the Nvidia chief did not like.

The growing friendship between Mr. Trump and Mr. Huang of Nvidia also appeared to encourage commerce officials to take a more cautious approach to regulating the company. Mr. Huang has become a frequent guest at the White House, has traveled with Mr. Trump to China, and often speaks on the phone with the president.

Nvidia’s inroads into the White House and the Commerce Department began last year. In the spring of 2025, the Trump administration began pushing forward with a ban on shipments to China of a chip called the H20. Mr. Lutnick told Nvidia that the matter was out of his hands. The company’s only recourse would be to appeal to the president.

Mr. Huang, who was in Florida to receive an engineering award, traveled to Mar-a-Lago for a donor dinner to meet with the president and plead his case.

In April, the ban was issued anyway. But Mr. Huang continued to cultivate his ties with the president. He promised a huge investment in U.S. manufacturing and pledged a donation to the White House ballroom.

By December, Mr. Huang achieved a notable victory. Mr. Trump agreed to allow the company to sell its more advanced H200 chip to China, as long as the U.S. government got a cut of the revenue — an idea that prompted widespread outrage about American national security being for sale. Commerce Department lawyers were deployed to figure out a way to sidestep a U.S. law banning export taxes and realize Mr. Trump’s proposal.

There are also concerns about possible conflicts of interest given that the investment firm that Mr. Lutnick steered for decades, Cantor Fitzgerald, operates in a wide range of industries, from cryptocurrency to data centers, that rely on Nvidia chips and could be affected by rules Mr. Lutnick is currently weighing. That business is now run by Mr. Lutnick’s sons.

Cantor, the business run by Mr. Lutnick’s sons, has served as a financing or placement agent for several companies that are involved in developing or operating data centers in Southeast Asia, like Gorilla Technology Group and Bitdeer Technologies Group, which could be hurt by tougher U.S. limits on chip sales to the region.

The activities of Mr. Lutnick’s sons have been a source of irritation for Mr. Trump and concern for some other Trump advisers, despite the fact that Mr. Trump’s own sons’ businesses have prompted similar criticisms.

The Commerce Department spokeswoman said that Mr. Lutnick had fully divested all financial interests in Cantor Fitzgerald and had no interactions or discussions whatsoever with Cantor Fitzgerald regarding Nvidia. Cantor Fitzgerald declined to comment.

Influence and enforcement

Mr. Trump and Mr. Lutnick’s closeness with Mr. Huang also reverberated inside the Commerce Department. Top officials appointed by the Trump administration encouraged a more careful attitude toward the company, to the chagrin of rank-and-file employees who wanted to continue the department’s mission.

Mr. Kessler, Mr. Lutnick’s deputy, required communications with the company to be routed through him. Some commerce officials said their bosses had shown little interest in proposed investigations into Nvidia, instead encouraging them to go after Nvidia’s smaller customers.

The department says it has levied far more fines for export control violations than before, and been involved in at least six cases involving smuggling of Nvidia chips, though none of those charges have fallen on Nvidia itself. The department has also refrained from adding Chinese firms that are major Nvidia customers to its entity list, which restricts American companies from exporting products to those companies. The Commerce Department has approved licenses for Nvidia to sell its chips to Chinese firms that The Times found to have links with sanctioned entities or military contractors.

Nvidia also tried to shape the department’s staff. In an effort coordinated by Ned Finkle, the head of external affairs, Nvidia funded opposition research into groups with ties to “effective altruism,” a movement that has sought tighter chip controls as part of an effort to protect humanity from A.I.

The company’s leaders spoke with officials in the administration about effective altruists and complained that there were some at Rand, which had a contract with the Commerce Department to provide a member of the administrative staff. The staff member was dismissed after Nvidia complained that licenses were not being granted for its chip sales to China, these people said.

The tighter ties between Nvidia and the Commerce Department also gave Tim Teter, Nvidia’s general counsel, unique influence over the department and its rule-making process. When department staff reviewed drafts of policies under consideration, they sometimes found themselves looking at comments and critiques in the document that had been inserted by Mr. Teter.

With draft rules about the sale of Nvidia’s H200 chips to China, Mr. Teter inserted notes that had the potential to weaken rules that required companies to know who they were selling their chips to, and aimed to influence the volume of shipments allowed to China.

While commerce officials often meet with industry representatives to discuss the impact on business of potential rules, this was viewed as an unusual amount of influence.

A Commerce Department spokesman said it was routine for agencies to consult with companies as they finalize rules. He said the agency aggressively pursues enforcement cases and had never directed staff to refrain from targeting any company. The agency was continuing to consider new entity listings and working with other agencies on that process, he said.

Rob Copeland contributed reporting.