What’s behind President Donald Trump’s deal to allow China to purchase Nvidia computer chips? This question is raised due to the fact that China is the U.S.‘s most serious geopolitical foe and is currently engaged in what amounts to an artificial intelligence arms race.

So, why did Trump green-light a move that, as many pundits have noted, appears to pose a threat to national security?

Trump, for his part, expressed the exact opposite perspective, posting on Truth Social, “The United States will allow NVIDIA to ship its H200 products to approved customers in China, and other Countries, under conditions that allow for continued strong National Security.” He added, “$25% will be paid to the United States of America.”

Clearly, Trump sees this as a great business opportunity for the U.S. that will serve to enrich the country. And for Trump, his biggest beef with Beijing has always been economic. He sees, and rightfully so, that China has taken advantage of the U.S. to the detriment of the American worker. This view helps explain Trump’s tariff campaign, in which he aims to bring production and industries back to the U.S.

But how does selling advanced computer chips — which, by the way, are still not being made by Americans (the majority being made in factories in Taiwan and South Korea) — benefit the American worker?

As the editors at National Review succinctly put it, “China gets more advanced chips, Nvidia gets more sales, and the U.S. government gets a cut of the revenue.”

The Nvidia chip in question, developed in 2024, is the H200, the company’s best AI chip, which the Biden administration barred from being sold to China. Nvidia responded by producing the less powerful H20 chip for the Chinese market, but Beijing effectively put the kibosh on that by discouraging Chinese companies from buying it.

According to a report to the House Select Committee, “The H200 provides 32% more processing power and 50% more memory bandwidth than China’s best chip,” which Beijing would use “to strengthen its military capabilities and totalitarian surveillance.” The report warned, “Nvidia should be under no illusions — China will rip off its technology, mass produce it themselves and seek to end Nvidia as a competitor. That is China’s playbook and it is using it in every critical industry.”

Other than temporary financial gain, how is this a good deal for the U.S.? Nvidia gets to “sell its H200 chip to China in return for the U.S. Treasury getting a 25% cut of the sales,” notes The Wall Street Journal’s editorial board. “The Indians struck a better deal when they sold Manhattan to the Dutch.”

How is this move not a recipe for the U.S. giving up its lead in AI computing power? China is estimated to currently be 18 to 24 months behind the U.S.

One argument is that by selling China, the U.S. prevents the Chinese from developing their own technological breakthroughs by keeping them reliant on American tech. In other words, it’s cheaper and easier for Beijing to simply buy and copy U.S. tech than spend big on research and development.

From this perspective, it keeps the U.S. consistently at the forefront of tech development, even if it may sacrifice cost and volume.

It could also simply be that Trump believes China will soon catch up to the H200 chip and has decided the U.S. might as well make hay while the sun shines.

Finally, Trump may be privy to some information about tech development that places the U.S. even further ahead in AI and computing than is publicly known. If that’s the case, Trump may be giving away little to China.