A hypothetical proposal from a new Trump administration to demand a 15% share of Nvidia’s revenue from sales in China in exchange for critical export licenses has ignited a fierce debate among legal experts and industry observers, raising questions about government overreach, the potential for dangerous precedents and the legality of such an arrangement.
The unconfirmed but widely discussed concept, emerging as the new administration charts its course on technology and trade policy with Beijing, would represent a dramatic shift in how the United States (US) government interacts with private industry, potentially turning export controls into a direct revenue stream. Nvidia, a leading designer of graphics processing units (GPUs) essential for artificial intelligence, has faced significant restrictions on its ability to sell advanced chips to the lucrative Chinese market.
Sources familiar with the discussions who were not authorized to speak publicly, suggest the proposal aims to both financially benefit the United States (US) Treasury and assert greater control over critical technology transfers, framing the revenue share as a “national security dividend.” However, the notion has immediately drawn scrutiny for its novel and potentially unconstitutional nature.
Legal scholars point to several immediate hurdles such a plan would face. The Export Control Reform Act (ECRA), the primary statute governing U.S. export controls explicitly prohibits the charging of fees in connection with export license applications or approvals. Critics argue that a 15% revenue cut, regardless of its nomenclature would function as a de facto fee for market access directly contravening this statutory provision.
Constitutional law experts cite the clear prohibition against export taxes in Article I, Section 9, arguing the 15% revenue share functions as an impermissible levy. The Economic Cleanup Responsibility Act (ECRA) further prohibits fees for export licenses, which critics say this proposal effectively is. Challenges could also arise under the Fifth Amendment’s Due Process Clause concerning equal protection, as singling out companies might be seen as discriminatory. Recent Supreme Court decisions, like Loper Bright Enterprises v. Raimondo and Corner Post, Inc. v. Board of Governors of the Federal Reserve System, limiting judicial deference to federal agencies, could empower companies to challenge and potentially invalidate such policies that exceed statutory authority or constitutional rights.
Beyond legal concerns, the ethical implications of government monetizing private industry for regulatory approvals are profound. Critics warn this could create a dangerous “pay-to-play” precedent where market access depends on financial contributions, distorting competition and stifling innovation. Such a policy risks government coercion, eroding public trust and establishing a moral hazard where regulatory decisions prioritize financial gain over sound policy. This hypothetical proposal underscores a new frontier in U.S. trade policy, promising significant legal and ethical debates.
