Trump Is Breaking Boundaries of Constitution With Chips Payoff Deal

Disregarding the Constitution’s export clause, the Trump administration has struck an unprecedented arrangement to take a 15 percent cut of Nvidia and Advanced Micro Devices’ chip sales to China.

Under the deal, first reported on Sunday, the companies will pay the U.S. government for sales of chips used for artificial intelligence—Nvidia’s H20 and AMD’s MI308 chips—in China in order to obtain export licenses to the country, despite national security restrictions.

According to the Financial Times, the arrangement is unprecedented, as “no US company has ever agreed to pay a portion of their revenues to obtain export licences.” Several media reports have called it “unusual.”

“Unconstitutional” would evidently work just as well. As Peter Harrell, a former Biden administration official and current fellow at the Carnegie Endowment for International Peace, as well as many other observers, noted, the move disregards the U.S. Constitution’s prohibition on export taxes. The export clause states: “No Tax or Duty shall be laid on Articles exported from any State.”

The administration can be expected to characterize the arrangement as something other than a tax. It may ultimately be up to the courts, if the move faces legal challenges, to tell this like it is.

Constitutional concerns aside, this development represents the latest in an ongoing saga of Trump flip-flopping on chips, as the administration previously reportedly planned to ban the export of Nvidia’s H20 chips to China, before having a change of heart in April after the company’s CEO paid $1 million to dine with the president at Mar-a-Lago.