Trump 15% tax deal with Nvidia and AMD sparks constitutional debate

The Trump administration has reportedly reached an unprecedented deal with chipmakers Nvidia and AMD, allowing them to export specific AI chips to China in exchange for a 15% cut of sales—initially proposed at 20%. The deal, which involves the H20 chip from Nvidia and the MI308 from AMD, lifted a prior export ban but remains theoretical as legal details are finalized by the Department of Commerce. Critics argue the arrangement may violate the U.S. Constitution’s Export Clause, which prohibits export taxes [1].

Legal experts, including Erik Jensen of Case Western Reserve University and Columbia’s Eric Talley, highlight the constitutional risks of the arrangement. Jensen notes that such a model has no historical precedent in U.S. trade law, citing past Supreme Court rulings in IBM and U.S. Shoe that struck down export taxes on constitutional grounds. Talley adds that while subsidies on exports have existed, direct taxation of exports is rare and constitutionally suspect [1].

Treasury Secretary Scott Bessent has defended the deal as a unique but potentially replicable model, suggesting it could be expanded to other industries. The White House and the Treasury have emphasized that the deal involves only less-advanced chips, ruling out national security concerns. Instead, they frame the arrangement as a balanced strategy for trade, technology, and policy [1].

The unusual nature of the deal has drawn criticism from business leaders and legal scholars. Julia Powles of UCLA warns that such arrangements could pressure other companies into similar negotiations with the government. The Trump administration has previously engaged in high-profile corporate deals, such as the "golden share" in U.S. Steel and discussions on federal ownership stakes in Intel [1].

Historically, U.S. interventions in business have taken forms such as nationalization, regulatory control, subsidies, or bailouts—often during times of crisis. The current deal, however, introduces a novel mechanism: a fixed percentage of corporate revenue as a precondition for market access, which has no direct precedent [1].

Globally, export taxes are more common in developing nations, typically applied across all exporters rather than as one-off deals. Unlike traditional tax models, which apply to profits earned within national borders, this arrangement resembles a direct levy on export revenue, raising questions about its legality under international trade norms [1].

Jensen and Talley further note that the deal resembles a “protection racket,” where businesses pay a cut to secure market access. Talley acknowledges that while export bans—viewed as an “infinite percent” tax—have legal backing for national security reasons, the 15% levy in this case seems less extreme by comparison. However, he raises the issue of who would have standing to challenge such a tax in court [1].

The deal remains a legal gray area, with uncertainty over its constitutionality and enforceability. If implemented, it could set a dangerous precedent for future government-corporate negotiations, reshaping the landscape of international trade and regulatory intervention.

Source: [1] Trump’s unprecedented, potentially unconstitutional deal with Nvidia and AMD, explained: Alexander Hamilton would approve (https://fortune.com/2025/08/16/is-trump-deal-amd-nvidia-china-chips-constitutional/)