Trump’s Nvidia and AMD deal highlights the core challenge: export controls on China require a strong allied coalition.
In the evolving US-led export control effort against China, recent news has startled observers. The tech firms Nvidia and AMD agreed with President Donald Trump that, in exchange for being able to export their advanced semiconductors to China, the firms would give the US government a 15 percent cut of their sales. US Treasury Secretary Scott Bessent praised the deal, saying it should serve as a model for the future. But this deal, and others like it, will weaken the already challenging US export control effort that seeks to limit Chinese military power.
This export regime, first organized by the Biden administration, seeks to slow China’s AI progress and maintain the United States’ military advantage by restricting China’s access to advanced semiconductor technology. Members of the export control coalition include several countries whose firms are vital in the global semiconductor supply chain: Japan, the Netherlands, South Korea, and Taiwan.
Debating Export Controls
There’s plenty to debate about export controls. Some say it makes sense, both economically and strategically, to keep a rival dependent on your own technology. Others say such technology sales only validate Vladimir Lenin’s prediction that “The capitalists will sell us the rope with which we will hang them.” People also debate to what extent the chips in question (Nvidia’s H20 and AMD’s MI308) are sophisticated enough to actually enable China to catch up.
But those debates aside, once the US government decides to have an export control regime, it should adopt policies that make it a well-functioning one. Trump’s recent deal jeopardizes that.
Any multilateral sanctions effort—which is what this is—is a challenging endeavor. To have any chance of succeeding, sanctions have to be multilateral, which makes them fraught with collective action problems. Participating countries are tempted to defect by breaking (or weakly enforcing) whether their firms comply with the rules. Yet leaders are loath to deny their firms export opportunities. Market share and revenue are at stake—revenue that is essential for investing in future innovation, which drives firms’ future competitiveness.
Diverging Interests Among Allies
The current export control effort against China is particularly challenging and a big ask from Washington. After all, member countries’ firms depend heavily on the Chinese market. Their governments also fear that an angered Beijing will reach for its oft-used tools of economic retaliation.
Prospects for a strong coalition are further reduced because these countries’ strategic interests significantly diverge. Namely, because the US government may someday put Americans in the crosshairs of Chinese weaponry, the United States perceives that it has a strong interest in reducing China’s military capabilities. Other countries, however, have much less skin in the game. After all, the Netherlands sits thousands of miles away, and South Korea is not part of a counter-China coalition. From the beginning, Washington has had to pressure and plead in order to get those countries to deny their advanced technology to the Chinese.
To encourage compliance with export control restrictions, the coalition must agree upon rules together and see members conscientiously enforcing them. In particular, as the leader, the United States must negotiate with its partners, set clear guidelines, rigorously enforce rules among its own firms, and work with partners to make sure they are doing the same.
Lessons from the Cold War
Perceptions of weak or uneven enforcement can trigger a cascade of defection. During the Cold War, North Atlantic Treaty Organization (NATO) countries restricted technology sales to the Warsaw Pact and China through an export control regime (the Coordinating Committee on Multilateral Export Controls, or CoCom). Although rife with violations throughout, CoCom’s most notorious one was a sale to the Soviet Union of sophisticated machinery for manufacturing quieter submarine propellers.
The Soviets initially approached the Japanese firm Toshiba for machine tools in 1974; Toshiba refused, observing CoCom restrictions. A firm from France —another CoCom member—made the sale. As Dartmouth scholar Michael Mastanduno writes, “The French violation ultimately did double damage: Toshiba Machine officials, bitter over having lost the initial sales, proved more receptive in 1979 when the Soviets approached them again, this time requesting even more sophisticated machines.”
A Norwegian firm, Kongsberg, joined Toshiba in supplying the Soviets with advanced computer equipment. In short, French defection encouraged Japanese and Norwegian defection—ultimately making Soviet submarines harder for NATO to find and increasing the Soviet nuclear threat.
The Risks of Trump’s Approach
The specter of American firms being able to subvert export controls by giving their government a cut of profits is one that will make already unenthusiastic export control partners even less enthusiastic about policing their own firms. Trump’s 15 percent cut of Nvidia and AMD sales suggests that, under this administration, American compliance will be driven by political whims and personalist politics. This is ruinous for a functioning export control regime.
Pay-to-play is particularly disquieting in an administration that has created so many ways to pay. From stays at Trump properties, to $TRUMP cryptocurrency, to purchases of film rights, firms have a variety of chits through which they can curry Trump’s favor: giving not just the US government, but Trump himself, a cut of the action. America’s export control partners can be forgiven for doubting just how committed the US government is to the control regime’s goals and will be tempted to let their own domestic political considerations—which leaders have been spending valuable political capital to hold at bay —drive policy.
Trump’s critics have frequently argued that rapid policy shifts and reversals harm firms and undermine US global leadership; critics also decry how corruption in the administration erodes US democracy. A stronger Chinese military may be another cost.
About the Author: Jennifer Lind
Jennifer Lind is an associate professor of government at Dartmouth College, a faculty associate at the Reischauer Institute for Japanese Studies at Harvard University, and an associate fellow at Chatham House, London. She received her B.A. from the University of California at Berkeley, her M.I.A. from the University of California at San Diego, and a Ph.D. from the Massachusetts Institute of Technology. Her upcoming book, Autocracy 2.0: How China’s Rise Reinvented Tyranny, will be published on November 15, 2025, by Cornell University Press.
Image: William Potter/Shutterstock
