Commerce Secretary Howard Lutnick is facing mounting scrutiny and talk of an ouster over his alleged failure to properly restrict shipments of advanced AI chips to communist China as President Donald Trump had ordered.
According to an Axios report published on Wednesday, Trump approved crackdowns against potential diversions of Nvidia chips to China on at least three occasions — in May, in August, and on Nov. 5.
‘Recent developments underscore the significant national security and economic interests at stake.’
The action approval in May allegedly came after Trump and White House officials received a report detailing suspected Chinese spy Alice Huang‘s relationship with Jensen Huang, the married tech magnate who resigned as Nvidia CEO on Thursday.
One high-level source told Axios that in a subsequent meeting, Treasury Secretary Scott Bessent, War Secretary Pete Hegseth, and White House officials urged Lutnick and Commerce Undersecretary Jeffrey Kessler to take action, “and they were refusing.”
That same month, the Commerce Department reportedly approved around 10 Chinese companies — including Alibaba, Tencent, and ByteDance — to purchase Nvidia H200 AI chips.
The alleged Chinese espionage scandal blew up on October 29 when the New York Times reported that American officials had concluded Alice Huang was a “Chinese intelligence asset” who was possibly trying to steer Nvidia chips to China.
Attorney General Todd Blanche said on Thursday that while the FBI was looking into whether Alice Huang was working for Beijing, it has yet to be determined whether she was a spy.
Bloomberg/Getty Images
On November 5, Lutnick met at the White House with Bessent, Hegseth, Secretary of State Marco Rubio, and U.S. Trade Representative Jamieson Greer.
Citing interviews with multiple high-level sources “who were briefed on or, in some cases, heard the discussions,” Axios reported that Bessent confronted the billionaire commerce secretary about why his department had supposedly “resisted implementing the export controls, particularly on Megaspeed,” where Alice Huang was previously an executive.
Lutnick reportedly signaled agreement with the others gathered for the meeting but allegedly said, “I need to check with the president.”
This apparently set off warning bells “because officials have repeatedly believed the Commerce Department would impose the export controls, only to have nothing happen,” reported Axios.
One official said, “He’s stalling it out.”
Another source said, “This is an ongoing concern with Howard and this issue.”
Apparently keen to force the issue, one person present at the meeting reportedly advocated for pursuing the export controls that day, prompting a second meeting at the Oval Office on November 5 with the president, who called Elon Musk.
While Musk allegedly sided with those favoring export controls, Lutnick allegedly warned that such export controls “will start a trade war with China.”
Despite the president reportedly telling his team, “Let’s get it done,” Lutnick allegedly said he would “develop some options and come back.”
“Everyone was like: ‘No, no, the decision’s been made. Go f**king execute,'” said one source. “Well, it still hasn’t happened.”
The Commerce Department and the White House did not immediately respond to Blaze News’ requests for comment.
While she did not comment on the other allegations, Commerce Department spokeswoman Kristen Eichamer denied that Bessent confronted Lutnick, according to Axios.
Senator Jim Banks (R-Ind.) told Fox News on Thursday, “This news is as concerning as it gets.”
“When you’re in a war with another country, you don’t give them your best technologies,” continued Banks. “And that’s why lawmakers, for the last two years, have been pushing hard to stop our high-end computer chips from being exported to China.”
Banks noted that Nvidia “opposed other export control laws, and now we know that the Department of Commerce, Secretary Lutnick, it appears, used loopholes to allow some of these chip sales to occur” despite Trump’s directive.
Sen. Tim Scott (R-S.C.), chair of the Senate Banking Committee, sent letters to Lutnick and Jensen Huang on Thursday, requesting that they voluntarily appear before the committee next month.
“Given the Department of Commerce’s central role in issuing and enforcing export control regulations, your testimony before the Committee will be essential to our oversight of these efforts,” Scott wrote to Lutnick. “Recent developments underscore the significant national security and economic interests at stake and the need for timely, substantive engagement with Congress.”
Kristen Eichamer, spokeswoman for the Commerce Department, confirmed to NBC News, “Secretary Lutnick has proactively agreed to appear voluntarily before the Banking Committee to address their questions.”
Citing two people familiar with the situation, Reuters reported on Friday that senior White House officials are discussing whether Lutnick should get the boot.
A White House official told Reuters, however, that Trump “maintains complete confidence in the secretary and his ability to carry out the position.”
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Ai, Howard lutnick, Donald trump, Scott bessent, Pete hegseth, China, Nvidia, Politics
