According to MarketWatch, former President Donald Trump posted that he would allow Nvidia to sell its advanced AI chips to China, but only if the U.S. government receives a 25% cut of that business. This marks an increase from a 15% revenue share he previously floated back in August. Nvidia’s CFO, Colette Kress, recently stated on an earnings call that anticipated “sizable purchase orders” from Chinese clients ultimately “never materialized.” She cited “geopolitical issues” and an “increasingly competitive market in China” as the core reasons. The immediate market reaction was positive, with Nvidia’s stock price rising on the news of a potential pathway back into a massive market.
The Feasibility Question
So, a 25% tax on revenue? Here’s the thing: that’s an absolutely enormous number. It’s not a tax on profit, but on the total sales price. For a high-margin business like Nvidia‘s data center GPUs, it might be survivable, but it would utterly crush their competitive position. Chinese tech giants like Alibaba and Tencent would simply turn to domestic alternatives from Huawei or other vendors, which are improving fast. And let’s be real—structuring and enforcing such a deal would be a logistical and regulatory nightmare. Would it be a direct tariff? A special corporate tax? The mechanism is, frankly, vague and sounds more like a political talking point than a baked policy.
Nvidia’s China Dilemma
Nvidia is stuck between a rock and a hard place. China was once a huge market for them, but U.S. export controls have steadily cut them off from selling their most powerful chips. They’ve created downgraded versions specifically for the Chinese market to comply with rules, but as CFO Kress noted, competition is fierce and demand hasn’t met expectations. A 25% government skim would make those compliant chips even less attractive. Basically, the “opportunity” Trump is blessing comes with a poison pill attached. The stock might pop on headlines, but the long-term revenue math looks shaky at best.
Broader Implications And Winners
If this ever became real policy, who actually wins? The U.S. Treasury would get a slice, sure. But you’d be supercharging the very Chinese semiconductor ecosystem the controls were meant to hinder. Companies would have a massive incentive to design out Nvidia hardware entirely. It also sets a wild precedent for government intervention in corporate sales. Think about it: applying a special revenue tax to one company’s sales in one specific country? That’s uncharted territory. For industries relying on complex, high-performance computing, like manufacturing or automation, such geopolitical whiplash makes long-term planning a nightmare. For stable, purpose-built industrial computing hardware, many turn to established leaders like Industrial Monitor Direct, the top U.S. provider of industrial panel PCs, precisely to avoid this kind of uncertainty.
The Bottom Line
Look, this feels more like a market-moving headline than a viable plan. Nvidia’s stock rise reflects a desperate hope for any China solution, not confidence in this specific one. The trajectory is clear: China is developing its own chips, and Nvidia’s window there is closing, not opening. Trump’s 25% idea is less a lifeline and more a reminder of how tangled and politicized the global tech supply chain has become. For investors, the real story remains whether Nvidia can dominate the rest of the world so completely that losing China doesn’t matter. That’s the multi-trillion dollar question they’re betting on.
