US Treasury Secretary Scott Bessent has drawn a clear line on AI chips. China, he said, should not receive anything more advanced than Nvidia’s H100.
That sounds like a simple rule. In practice, it lies at the center of one of Washington’s most complicated policy disputes, where national security, commercial interests and a sprawling smuggling problem collide.
Drawing the line at the H100
The H100 is one of Nvidia’s high-performance AI processors. It is used to train and run large AI models. By naming it as the ceiling, Bessent effectively set a benchmark: anything more powerful should stay out of Chinese hands.
His position does not amount to a call to shut the door forever. Bessent has signaled some flexibility about allowing older Nvidia chips into China as they lose their edge.
In November 2026, Bessent confronted Commerce Secretary Howard Lutnick over delays in blacklisting Megaspeed. The company is accused of rerouting advanced Nvidia chips to China. Estimates put the volume at hundreds of thousands of H100-equivalent units, valued in the billions.
Cabinet secretaries do not usually air disagreements over entity lists. When the Treasury chief presses Commerce on an enforcement timeline, it suggests the debate has gone well beyond routine paperwork.
The episode also reflects intelligence concerns about Nvidia’s leadership and its alleged connections to companies such as Megaspeed. Those connections remain allegations, but they have added pressure to an already tense policy area.
How we got here
US export controls on Nvidia chips began in August 2022. The first round targeted the A100 and H100 models, cutting China off from what were then the company’s most capable AI processors.
The rules have become more layered since then. Washington introduced case-by-case licensing reviews for newer models, starting with the H200. China-specific chip variants were introduced from January 2026, designed to fall below regulatory thresholds.
Nvidia’s Blackwell chips remained under strict export controls as of late 2025.
Rules on paper, however, have not stopped chips from moving. By mid-2026, an estimated 1–1.2 million H100-equivalents had been smuggled into China.
The Trump administration has tried to close those gaps. President Trump approved crackdowns on chip diversion in May, August and November 2026. Implementation has faced resistance both inside and outside the government.
What this means
The clash between Bessent and Lutnick shows the split is more than theoretical. Treasury appears focused on quickly closing enforcement gaps, while Commerce, which handles blacklisting, has moved more slowly on Megaspeed.
Several developments are worth watching. First is whether Megaspeed is blacklisted, and how quickly. A delay would signal that commercial considerations still carry real weight in Commerce’s decisions.
The second is how the ceiling may shift over time. Bessent’s openness to older chips implies that the H100 line is not permanent. If Washington eventually allows H100-class hardware to flow more freely, the next fight will be over the H200 and anything more powerful.
The third is enforcement capacity. Smuggling estimates of 1–1.2 million H100-equivalents suggest the bottleneck is not a lack of rules. It is the ability to track chips through shipping routes, shell companies and third countries.
