“I appreciate the fact that you designed that chip specifically for the Chinese market, and I do want to help you and I like to do favors. And I know who you are, but I cannot do that.”
The film buffs among you might recognize that as a modified version of a famous quote from Martin Scorsese’s Casino (Goodfellas Goes To Vegas, as I derisively call it), but it could easily be the transcript of a conversation between Donald Trump and Jensen Huang.
The two men spoke last week about export restrictions on AI chips bound for China, and according to the FT, Howard Lutnick’s Commerce Department started issuing licenses to Nvidia just “days later.” As it turns out, securing Trump’s blessing was as simple as setting up a skim.
If you read the short editorial accompanying the Sunday evening mailer this’ll be repetitive, but I’m obliged to cover it. According to multiple reports, both Nvidia and AMD will pay Trump (i.e., the US government) 15% of their haul from sales of AI chips into the Chinese market. To critics, this is yet another example of Trump applying his penchant for mafia-style quid pro quos to the conduct of US foreign policy.
When Nvidia reported Q1 results in May, the company said it incurred $8 billion in lost revenue tied to the Trump administration’s April decision to restrict sales of the H20, a less-advanced chip Huang designed for end users in China. At the time, I wrote that Huang was “working to appease The White House, and I suspect he’ll get some manner of reprieve eventually.” Sure enough.
The apparent pay-to-play deal was mercilessly derided on Monday as, to quote one former US trade negotiator who spoke to Bloomberg, “the monetization of US trade policy.” Words like “unprecedented” were bandied about. “What’s next — letting Lockheed Martin sell F-35s to China for a 15% commission?” a former NSC official sneered, in remarks to the FT. (Maybe!)
This idea of Trump’s is self-evidently odious. And it sets a God-awful precedent. But — and at the risk of trivializing another crossing the Rubicon moment and/or normalizing detestable behavior — what else is new? This is just par for the course. Par for Bedminster.
It occurs to me that readers assume the mob analogue is just a convenient way to characterize Trump’s modus operandi. It is that, but it’s also the most accurate lens through which to view his behavior. This is a Manhattan real estate developer who operated casinos. There’s no telling how many interactions — direct and indirect, formal and informal, knowingly and unwittingly — Trump might’ve had over the years with the Italian mob. The real Italian mob.
You couldn’t operate a construction business in the New York-New Jersey area in the 1980s without dealing, as a matter of course, with the five families. Whether you knew you were dealing with them is a separate issue, but you were. And on every aspect of any given project, from the materials to the labor to the permitting.
This isn’t to excuse Trump’s behavior (mob comparisons aren’t generally meant as flattery), but it’s important to consider the very real possibility that part of Trump has no conception whatever of why it’d be wrong to sell export licenses for 15% of related revenues paid out to the US Treasury. “What’s the damn problem?!” he might genuinely wonder. “It’s money for taxpayers!”
Not a lot, by the way. Not a lot of money. In the grand scheme of Nvidia’s business, those H20 chips are a drop in the bucket. To the US Treasury, they’re wholly meaningless. Taking a rough estimate, Trump might be able to scrape up $2 billion taxing Nvidia H20s and AMD MI308s, not enough to cover the government’s interest bill for a day. But that’s beside the point if you’re Trump.
So what is the point? Why do this? The US has gone out of its way to insist that restrictions on AI chip sales to China are grounded in legitimate national security concerns. Trump’s arrangement with Nvidia makes a total mockery of such claims. And that’s very bad in all sorts of contexts. Why do that for a lousy $2 billion?
The answer’s simple. As Christopher Walken’s Frank White put it in 1990, “From now on, nothing goes down unless I’m involved. No blackjack no dope deals, no nothing. A nickel bag gets sold in the park, I want in.”
I just cannot imagine the republican reaction had Obama suggested this. They’d lose their minds. So far today I haven’t heard even a hint of concern on their part.
Oh, and isn’t charging an export tax on US goods de facto unconstitutional?
Pretty efficient echo chamber don’t you think?
There is a bit of Fanucci here. Just wetting the beak!
I’ll answer my own question regarding constitutionality:
“No Tax or Duty shall be laid on Articles exported from any State”. (Article I, Section 9, Clause 5 of the US Constitution)
But aren’t Nvidia’s chips shipped from Taiwan?
I’m guessing that a lot of Trump supporters are impressed by the word ‘billion’, it must seem an incomprehensible number. If you don’t read the mainstream news then you have no idea that the Tesla board just gave Musk between 23 and 30 billion to continue to manage the company for a couple of more years. I’m guessing that Trump probably gets goosebumps thinking how he’s raking in a few more billions from one of his ‘operations’, not bad for the Capo.
I believe those interactions were direct, and done wittingly – much to the families’ chagrin eventually. When trouble started brewing in A.C. Trump supposedly approached the extended families in Philly, to no avail (they had figured him out) and so on to Brighton Beach, where his erstwhile Russo-philia made for easy game to the best, most magnificent mob …
Scotty ! Use that beam-me up thing-a-ma-jig, I want out of here!
And you will notice the have stopped talking about Epstein.
+1
Well, F-35s might not work, at least not as well as (the supposedly un-backdoored) H20s.
When I saw your weekend comment on the skim I thought you were joking. The joke is on us I guess.
King of New York is one of the best movies. Even the soundtrack…
With Bruce Dickinson yesterday and Frank White today, you’re on a two day Walken streak!
Whadya got for tomorrow?
A 10,000-word novelette. Publishing it at midnight ET tomorrow.
Looking forward to it! I was just wondering if your Walken reference streak would reach 3 days!
https://heisenbergreport.com/2025/08/18/catch-me-if-you-can/
This is a great movie. If you like this movie- I really think you will appreciate this book:
https://www.michaelfinkel.com/books/the-art-thief/
Everything Trump touches turns into a toll booth.
Not sure why anyone expects tariffs “to settle” at 15%, if the dealmaker himself is clearly unsure what he’s doing from one day to the next, as he’s already revealed/bragged.
Trump’s tariff gymnastics have at least proven that the Dems and rest of Congress, courts, Mag7 and sovereigns are not only NOT challenging him much, but are mostly bending the knee. That’s an itch that never goes away for Trump, at least not for long, even if the payoff supposedly goes to the Treasury. He’s been allowed (or at least been able) to concoct a narrative that riches, both in the form of direct tributes (gifts and “investments”) and import taxes somehow paid by exporters are a direct product of his diaper tariffs. Until proven otherwise, his mostly unchallenged unilateral tariff power will remain his go-to toy like the pair of cymbals your buddy gave to your 4-year old son one Christmas as a joke. Said differently, I don’t think this is over.
An aside – I always found it curious that many European government programs designed to promote business investment or just generally subsidize businesses were officially termed “schemes.” While that is not an inherently derogatory word, it conjures a sense of underhandedness to me and I wonder if Trump knows about this word. “I call them trade schemes, because these are bigger than trade deals, actually. The biggest anyone’s ever seen, so they don’t know what to call them. I call them schemes. It’s an interesting word, actually. Not many people know about it.”