The top Democrats on the House and Senate trade committees are demanding the Commerce Department preserve all records related to the Trump administration's decision last year to allow Nvidia to sell its advanced H200 chips to China. The investigation, announced Thursday by Senate Finance Committee ranking member Ron Wyden (D-Ore.) and House Ways and Means Committee ranking member Richard Neal (D-Mass.), follows the resignation of Nvidia CEO Jensen Huang amid a Chinese spy scandal.
In a letter to Commerce Secretary Howard Lutnick, Wyden and Neal said they are launching a probe into what they called a "scheme to approve and tax exports" of Nvidia's AI chips to Chinese companies. The lawmakers argue that the administration's use of Section 232 of the Trade Expansion Act of 1962 to greenlight the H200 sales is a misuse of a statute meant to protect national security, not to generate revenue.
"Congress wrote Section 232 to give the President a tool to take action against imports he has determined to pose a national security threat; Trump's use of the statute appears to have done the opposite, undermining U.S. national security and putting Americans at risk," the lawmakers wrote.
The investigation intensifies scrutiny of Huang's relationship with the Trump administration. Huang admitted earlier this week to an affair with Alice Huang, a former executive at Singapore-based cloud firm Megaspeed, who is suspected of being a Chinese intelligence asset. Huang had been one of Trump's most prominent allies in Silicon Valley, a connection that helped ease export restrictions on Nvidia's chips.
After initially restricting sales of Nvidia's H20 chips to China, the Trump administration reversed course last summer, allowing the company to sell the chips in exchange for a 15% cut of revenue. Late last year, the administration also approved sales of the more powerful H200 chips for a 25% revenue share.
The Democrats pointed to a recent New York Times report revealing that the Commerce Department approved dozens of Chinese firms to handle Nvidia's H200 chips, some of which have ties to entities under sanctions for national security reasons. The Times also reported that the department paused an investigation into Megaspeed regarding potential smuggling of Nvidia chips to China, passing the case to the Department of Justice, though neither agency confirmed the transfer.
"There appears to be a profound lack of due diligence in Commerce's process for approving these Chinese buyers of Nvidia chips—which is especially concerning in light of reports that Commerce suspended, following outreach from Nvidia, a separate investigation into Nvidia customer Megaspeed," the lawmakers wrote.
Axios reported Wednesday that Lutnick stalled an authorization from Trump and other agency heads to crack down on firms suspected of diverting Nvidia's chips. The Democrats' letter also accuses the administration of attempting to "mask an unconstitutional export tax as a national security tariff action—benefitting both Nvidia and the Chinese government."
Lutnick has been instructed to preserve all records related to the H200 decision. The investigation adds to mounting congressional pressure on the administration over its handling of chip exports to China, a issue that has drawn bipartisan concern. Lawmakers have already demanded Lutnick testify about the export loophole, and Huang's exit has not quelled congressional demands for answers. The controversy also raises broader questions about corruption claims against Trump's inner circle.
