Howard Lutnick's job is in question over Nvidia's China chip sales

The Nvidia affair has moved from a boardroom in Santa Clara to a Cabinet room in Washington. The question now is whether the Commerce Secretary who let the chips keep flowing keeps his own job.

Senior White House officials are debating whether Commerce Secretary Howard Lutnick should be removed, two sources told Reuters — the first time the Nvidia espionage scandal has threatened a Cabinet seat. Lutnick has faced mounting scrutiny from lawmakers over the administration's reluctance to place dozens of Chinese firms on the US trade blacklist, and over how much oversight his department exercised on Nvidia's exports to China, Reuters reported via The Independent. Concerns about his conduct surfaced before Jensen Huang resigned on Thursday, not after.

Neither the White House nor the Commerce Department answered Reuters' questions about Lutnick's position. Earlier on Thursday, a White House spokesperson said Trump "maintains complete confidence in the secretary and his ability to carry out the position." That is the standard sentence, and it was issued before the reporting that made it news.

Three presidential orders, no action

The most damaging account of how export policy actually ran came from Axios, which spoke to six high-level sources briefed on the internal discussions. On Thursday, as the scandal broke, Trump authorized a crackdown on companies suspected of diverting Nvidia's advanced AI chips to China — the third time this year he had done so. In the Situation Room that day, Treasury Secretary Scott Bessent confronted Lutnick over why his department had not implemented controls, particularly on Megaspeed, the company at the centre of the scandal. The room sided with Bessent. Lutnick appeared to agree, then said under his breath that he needed to check with the president.

Officials had heard that before. Trump had already approved action in May, in August, and again on November 5, and each time nothing was executed, according to Axios. On Thursday the group walked to the Oval Office around 5pm, Trump called Elon Musk, and Musk backed the case made by Bessent, Rubio, Hegseth and Trade Representative Jamieson Greer. Lutnick warned that the controls "will start a trade war with China"; the others argued China was already doing what he warned about. Trump's decision was "let's get it done." Outside the room, Lutnick proposed to develop options and come back. One source described the response as telling him the decision had been made and to go execute it. It still has not happened.

A Commerce Department spokesperson, Kristen Eichamer, denied that Bessent confronted Lutnick and would not comment on the rest.

The company nobody would label

Megaspeed is the hole in the policy. It is a Singapore-based firm incorporated in 2015 as a Chinese video game developer called 7Road International, and in the years since Alice Huang became a director it has become one of the largest buyers of Nvidia chips in Asia, CNN reported. Treasury staff argued it should go on Commerce's entity list. It never did. The Commerce Department has not added any company to that list in more than a year.

The senators who wrote to Lutnick this week put the purchases at more than $4.8 billion of advanced Nvidia AI chips since June 2024, per Reuters. Megaspeed denies wrongdoing and calls itself "a compliant and legal company"; China's foreign ministry called the spying allegations "groundless speculation." The awkward part for the administration is not the allegation but the timeline: officials including Lutnick were briefed months ago, in a classified memo shared with the president in May, about Huang's relationship with a Megaspeed executive US intelligence suspected of being a Chinese agent.

That memo is the reason this stopped being a story about a chief executive's private life. Once the government knew, the question became what the government did — and the answer appears to be that it kept approving the sales.

What Congress wants

The letters are stacking up. Senators Elizabeth Warren and Chris Coons told Lutnick, Secretary of State Marco Rubio and chief of staff Stephen Miller to preserve all documents related to Nvidia's China exports. Senators Ron Wyden and Representative Richard Neal opened an inquiry into the approvals that let Nvidia sell to Chinese firms "with concerning links to the Chinese government, military, and sanctioned entities," and challenged Trump's December 2025 decision to permit H200 shipments in exchange for a share of export revenue — which they called "an unconstitutional export tax."

Republican patience is thinner than the party line suggests. Senator Tom Cotton, who chairs the Intelligence Committee, urged Lutnick on Thursday to ban CXMT from operating in the US. Representative Brian Mast said Congress needs to scrutinise Commerce's approval procedure, while noting he still has confidence in Lutnick. Senator John Kennedy told Politico that Lutnick has questions to answer.

The New York Times reported that Trump's and Lutnick's closeness to Huang had itself made officials wary of taking aggressive steps on Nvidia's chip sales. That is the mechanism worth naming: export control, the most consequential lever the US has over the AI supply chain, was being operated through a friendship rather than a process.

The case for Lutnick

There is a defensible version of this. Selling older chips to China keeps Chinese labs dependent on American hardware instead of building their own, and that argument was Huang's, made repeatedly and in person to Trump — it is the reason H200 sales were allowed at all, in exchange for a 25% tariff. A Commerce Secretary slow-walking entity listings to protect a trade truce is doing a job, not necessarily a favour.

But that argument is about policy, and it does not explain the pattern. Three separate presidential authorisations producing zero listings is not a disagreement inside the executive branch; it is a department declining to execute. Either Lutnick was protecting a truce he believed in, or he was protecting a relationship — and the second reading is now the one Congress will test under oath.

What to watch

Megaspeed's status, first: if the entity listing lands this week, the administration is trying to close the story with an action rather than a resignation. Then Lutnick's testimony schedule, and whether Huang's promised appearance before House committees happens before or after it. Nvidia reports earnings Tuesday, November 17, with guidance that assumes no data-centre compute revenue from China at all — a number that now reads as an admission about what the export regime was actually doing. We covered the resignation and the succession question here — Jensen Huang resigns: Colette Kress is Nvidia's interim CEO.

If a Cabinet secretary slow-walks an export control the President ordered three times, should that be a resignation or a hearing? Write to us via our contact page.

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