It’s a significant shift. Under President Joseph Biden, the US banned the sale of most advanced AI chips to China, declaring them a national security risk. President Donald Trump has lifted the ban on the condition that US chipmakers pay the US government 15% of the proceeds.
The reversal represents a clear-eyed realization that export controls are failing to achieve their goal of keeping China down, CEPA tech fellows say. While the new policy appears free-market on the surface, it also signaled unprecedented state intervention in the semiconductor business.
Christopher Cytera
Export controls are ineffective in the medium-term, and counter-productive in the long run. This ultimately accelerates the independence of the target country, which often finds a better way to engineer the product anyway.
It already happened in telephone markets. Recall how China’s Huawei developed polar codes for 5G by itself, without stealing IP, but by getting the right academics on its books and launching a development program backed by massive state-backed investment.
The 15% “license” is an export tariff to make it more expensive for China Inc. to buy NVIDIA and AMD chips. China Inc. will develop these chips themselves anyway, so why not pocket some revenue for the US taxpayer while they do so? The revenue could be invested in strategic sectors for the US electronics industry, such as defense, or sectors where China is ahead, such as drones, electric vehicles, and greentech chips.
Christopher Cytera is a Non-resident senior fellow with the Digital Innovation Initiative at the Center for European Policy Analysis and a technology business executive with over 30 years of experience in semiconductors, electronics, communications, video, and imaging.
Elly Rostoum
On the surface, these developments epitomize Trump’s laissez-faire, free-market approach, and that the payback deal is quintessentially “deal making.” But the consequences overturn US policy and encourage Europe to re-orient China.
This new “15% for a license” model doesn’t just weaken US export controls — it guts their original strategic purpose, as well as the very grand strategy the US was pursuing to contain China’s rise technologically. By turning security-based restrictions into something you can simply pay to bypass, Washington has effectively thrown both the de-risking and decoupling playbooks out the window.
You’d have to go back to the era of European colonial oil concessions to find a comparable arrangement to this “15% cut for a license” deal. In the early 20th century, oil companies — backed by their colonial powers — secured long-term concession leases in places like Iraq and Iran by paying their home governments and appointed representatives a share of royalties. The parallel is striking: just as colonial powers traded resource rights for financial windfall, the US is now trading national security leverage for a steady cash flow from chip sales.
The message to Europe, especially to the Dutch government and ASML, is clear: you’re on your own. If the US is willing to monetize export licenses, why should Europeans forgo sales of lithography machines to China? This incentivizes them to deal directly with Beijing, eroding the collective pressure needed to “corner” China technologically.
Elly Rostoum is a Google Public Policy Fellow with the Center for European Policy Analysis (CEPA). She is a Lecturer at Johns Hopkins University. You can find out more about her work here: www.EllyRostoum.com
Matthew Eitel
The NVIDIA/AMD revenue-sharing deal, while a sea change for US export controls policy, is not necessarily surprising. Between the AI Action Plan, Middle East chip deals, and scrapping the Biden-era Diffusion Rule, the second Trump White House is so far executing a clear vision — albeit one that is ruffling the feathers of DC China Hawks.
The Trump Administration’s theory of victory for beating China in the AI race is clear: encourage the export of US AI technology, both software and hardware, to cement US tech as the global standard. The more US AI chips sold to China — even those debatably “older” like the H20 — the argument goes, the less Chinese firms will want to use lower quality domestically produced chips, increasing revenue for US firms while keeping China’s AI industry addicted to American tech.
This strategy is striking a nerve in Beijing. Communist Party authorities are having a hard time convincing Chinese AI firms to not use US chips. Issues with Huawei-produced chips forced DeepSeek to delay the launch of its latest AI model. Now Chinese authorities are accusing the US government of embedding tracking devices on NVIDIA chips — potentially leading to a ban on Chinese firms using the chips.
The deal is less about the death of export controls and more about the creation of a new policy lever for the Trump administration to demand US firms more closely align with its political priorities. US Treasury Secretary Scott Bessent is weighing applying this “beta test” to other industries.
Many will point to export taxes being unconstitutional in hope that this deal is not precedent setting. But it remains unclear whether anyone but NVIDIA/AMD have grounds to challenge in court, and neither firm has an incentive to bring said challenge.
Alongside reported discussions of the US government taking a stake in Intel, it is clear that Trump 2.0 and China increasingly agree on a more heavy-handed role for the state to guide their competition. As then-Senator JD Vance puts it, “there is no meaningful distinction between the public and the private sector in the American regime.”
Matthew Eitel is Chief of Staff at the Center for European Policy Analysis (CEPA).
His work is focused on the nexus of EU-US tech, trade, and national security, particularly export controls and transatlantic policy vis-à-vis China.
William Echikson
The Biden Administration trumpeted industrial policy. Its Chips and Science Act poured billions of dollars into semiconductor and electric vehicle subsidies. The Trump Administration is abandoning these policies — but intervening just as much or more in the free market, particularly with semiconductors.
Chipmakers court the president to win permission to sell to China, with a chunk of proceeds going to the government. What will come next? After berating and making peace with Intel CEO Lip-Bu Tan, Trump may have the government take a stake in the US flagship chip manufacturer — or force US chip designers to give Intel business at the expense of industry-leading Taiwan Semiconductor TSMC.
Beware: this isn’t a recipe for tech success. It’s a recipe for falling behind, directing companies to potentially buy overpriced, underperforming services. Just like Europe risks falling into a similar digital sovereignty trap of insisting on European tech, the US must resist the temptation of insisting on US tech. Semiconductors and artificial intelligence are globalized industries — and attempts to institute national preferences represent a step backwards for competitiveness.
William Echikson is a Non-resident Senior Fellow with the Tech Policy Program and editor of the online tech policy journal Bandwidth at the Center for European Policy Analysis.
Jack Galloway
Relaxed export controls, the opening of the Chinese market, and a zero-for-zero tariff on European semiconductor equipment will create significant growth opportunities for Dutch semiconductor equipment maker ASML.
The Dutch company represents a critical chokepoint in the global semiconductor and artificial intelligence supply chain. It remains the sole manufacturer of extreme ultraviolet lithography machines used to fabricate sub 7nm chips critical for AI data centers springing up across the globe.
Under the Biden Administration, ASML faced strong pressure to not sell EUV equipment to China. While it remains unlikely that the Trump administration will revoke these direct EUV sale restrictions, increased market access and surging capital investment in data centers will spur further demand for ASML EUV machines.
Even if American firms in the AI tech stack continue to reshore portions of semiconductor production, they will still need ASML’s lithography equipment. This should give Europe the time and leverage it needs to develop its own chip manufacturing capacity, intellectual capital, and investment ecosystem.
Jack Galloway graduated from University of California Berkeley, with double majors in Political Science and Environmental Economics. He served as the Editor-in-Chief of the Berkeley Political Review.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
2025 CEPA Forum Tech & Security Conference
Explore the latest from the conference.
