Trump Reverses US AI Chip Export Policy to China
By Carlotta Kozlowskyj | 9 February 2026
Summary
On 14 January 2026, the Trump administration fundamentally shifted US semiconductor policy, allowing the exports of advanced AI chips to China under specific conditions
This decision has sparked congressional opposition, as it could erase the US's decisive AI advantage over China.
Chinese firms have already placed orders for over 2M H200 chips, worth up to USD 14n, enabling China to close the gap with US AI leading labs.
Context
On 13 January 2026, the US Department of Commerce’s Bureau of Industry and Security changed the export license review policy from “presumption of denial” to “case-by-case review” for NVIDIA H200 and AMD MI325X-equivalent chips exported to China. The Trump administration announced on 14 January that it would approve the sale of NVIDIA’s H200 chips to China, while imposing a 25% tariff on advanced chips. This marks a substantial shift from US policy since 2022, which aimed to maintain the lead over China in AI by restricting its access to advanced AI chips.
The H200 chip is one of the most advanced computational devices, which plays a key role in the processing for AI. NVIDIA was first prohibited to sale to China in 2022 under the Biden administration. However, according to the Trump administration, US chips restriction has been counterproductive and have ceded ground to Chinese competitors, which is why it is crucial for US manufactured chips to remain at the centre of global AI infrastructure. The US seeks to monetise Chinese demands while maintaining technology control on China’s computing capacities.
This new policy prioritises national security objectives through transaction-specific risk assessments, in which customers must demonstrate “sufficient” security procedures. Additionally, the product must undergo a third-party “Mandatory US Testing” phase to verify its performance before export. As such, transactions linked to military, intelligence, surveillance and other sensitive programs remain subject to strict reviews and controls.
In parallel, the US House of Representatives Foreign Affairs Committee passed a bill, the AI Overwatch Act, which seeks to expand congressional oversight over AI chip exports. The shipment of advanced AI chips would require both the House of Foreign Affairs Committee and the Senate Banking Committee approval within 30 days. If passed, it would revoke existing licensing for AI transfers.
This policy shift also reflects the US vulnerability to China’s tightening export control on critical minerals, which are essential for semiconductor manufacturing, since July 2023, escalating to outright export bans to the US in December 2024. China refines approximately 70% of the world's silver used in chips and dominates the processing of rare earth elements such as gallium, which are essential materials to advance chip production. China’s restriction on these mineral exports has created significant leverage, pressuring the US to soften its stance on chip exports.
Implications
Lifting export controls on H200 risks accelerating China’s development of the most advanced AI models and infrastructure, as they are essential to AI systems, and China’s domestic production is severely constrained. Although the H200 is not Nvidia’s best chip, it is six times more powerful than any US chip available today in China or proposed by Huawei. Huawei’s best domestic chips operate at only 60-70% of H200 capability and can only be produced in hundreds of thousands, whereas NVIDIA produces millions. Thus, this could cause Chinese AI developers to close the technological gap with the US. If the US exported no advanced chips to China, its compute capacity in 2026 would be ten times that of China, which could significantly decrease with H200 exports. In addition, the “AI Overwatch Act” passed on 22 January 2026, introduces a permanent state of uncertainty for the global supply chain, as licenses granted by the Commerce Department could be revoked by the legislature at any time.
The primary beneficiaries of this new policy shift are the “Big Three” of Chinese Cloud computing: Alibaba, Tencent and ByteDance, which aim to bridge the compute gap with domestic alternatives. In particular, ByteDance has centred its 2026 strategy on prioritising H200 acquisition to generate AI research labs. Chinese tech companies, led by ByteDance, are preparing orders reaching up to $14B for 2026. Nevertheless, despite the policy shift, AI chips still undergo a 25% tariff and a mandatory 50% volume cap, to protect the US domestic supply. This shows that advanced computing is no longer solely considered a commercial product but also a highly regulated strategic asset.
Despite Trump's policy shift, China may unilaterally reject this concession as it has instructed its customs authorities to block imports of H200 chips and warned national technology companies against purchasing them unless necessary. This suggests China is balancing acquiring advanced computing power against avoiding strategic dependence on US technology that could be weaponised in future conflicts. The decision also risks undermining multilateral export controls that the US has negotiated with allies like the Netherlands, Japan, and South Korea, who may recalculate their own restrictions if they perceive US commitments as negotiable under industry pressure.
This policy reversal also demonstrates the fragility of US supply chains for semiconductor manufacturing, as China's dominance over critical mineral refining gives it significant counter-leverage. Any future escalation in US chip restrictions could prompt China to further tighten mineral exports, disrupting US and allied chip production. This mutual dependency suggests this may no longer be an era of unilateral US technology restrictions, with a more transactional relationship in which both sides hold strategic chokepoints.
Forecast
Short-term (Now - 12 months)
It is highly likely that this decision will further China’s ability to build AI models and scale data centres, significantly narrowing the computing gap between the US and China.
It is likely that this policy shift will benefit US commercial short-term interests, especially NVIDIA’s.
There is a realistic possibility that AI Overwatch Act will pass the House but face Senate resistance, creating months of policy uncertainty.
It is likely that China will maintain its minerals export restrictions to preserve leverage, even as chips exports resume.
Long-term (>1 year)
It is likely that China could use H200 computing power for military applications, such as AI-enabled drones, precision strike systems, and enhanced cyber warfare capabilities.
It is likely that Chinese cloud providers (Alibaba, Tencent, etc.) could leverage H200-powered infrastructure to directly compete economically with US firms such as Google Cloud and AWS.
There is a realistic possibility that China will use the opportunity to buy H200 chips, as a chance to learn and become self-sufficient in the long-term.
