Trump Cabinet Friction Spills Out as Bessent Faults Lutnick Over Nvidia Export Oversight

A high-stakes corporate scandal involving semiconductor giant Nvidia has erupted into open conflict within President Donald Trump’s cabinet. US Treasury Secretary Scott Bessent has publicly criticized Howard Lutnick’s Commerce Department, blaming officials there for failing to adequately police the export of advanced artificial intelligence chips. The rift follows the sudden removal of Jensen Huang as Nvidia CEO after disclosures about his relationship with a former executive at Megaspeed, a cloud computing firm suspected by US agencies of smuggling high-end microchips into China. Investigators suspect the former businesswoman may be a Chinese spy. Speaking to CNBC, Bessent voiced deep irritation with trade oversight delays. He stated that multiple government entities “were in favour of putting Megaspeed on the entity list for months” to halt sanctioned transactions. “But Commerce has the pen… And you will have to ask them about their internal process,” Bessent said, noting he felt “frustrated” by delays in putting the company on the export control list and reports of leakage of AI chips into China.

Export Oversight Under Fire

Bessent stressed that national security policy under President Trump explicitly bans sending top-tier hardware to Beijing. “President Trump made it very clear that China shouldn’t receive any Nvidia chips above H100s, so any leakage is very frustrating because it hurts our great companies in the AI race, because it gives the Chinese an advantage,” he stated. Bessent also questioned whether Nvidia did enough to police its own supply chains, arguing that the focus must move beyond “Jensen Huang’s personal foibles.” He questioned whether Nvidia properly scrutinized its buyers or knowingly sold components to apparent pass-through shell entities, demanding accountability for anyone involved. Last year, the Commerce Department opened an investigation into Megaspeed over suspicions it was illicitly moving Nvidia processors to Chinese buyers. While interagency pressure mounted to blacklist the firm, reports indicated the Commerce Department delayed adding Megaspeed to the trade restriction list. Public disagreements between Bessent and Lutnick mark a rare breach in cabinet unity, though the two officials have clashed previously. In 2024, both men jockeyed for the Treasury post before Trump took office, and they later clashed over administration tariff policies.

Congressional Probes Multiply

Capitol Hill is now moving aggressively to examine the government’s export licensing decisions. Commerce Secretary Lutnick and ousted CEO Huang have both been summoned to testify before the Senate Banking Committee next month. Senate Banking Committee Chairman Tim Scott, a Republican, warned on social media that recent revelations raise severe concerns about national security and technological protection. Meanwhile, Democratic leaders are launching parallel inquiries. House Ways and Means Committee Ranking Member Richard E. Neal and Senate Finance Committee Ranking Member Ron Wyden are investigating how Nvidia’s powerful H200 chips reached overseas markets. Under current policy, those Taiwan-manufactured chips could be exported to Chinese entities after arriving in the US for inspection and paying a 25% tariff. Neal and Wyden argued that using trade mechanisms intended to protect national security has instead backfired. Congressional committees have formally directed Lutnick and the Commerce Department to preserve every communication and official record concerning Nvidia, Huang, and Chinese chip exports.