The Trump administration’s decision to reinstate exports of H200 chips to China, heralded as a political U-turn, is in practice more like opening a barrel than a gate. While markets have reacted optimistically to the vision of Nvidia returning to its key export market, a detailed analysis of the new Bureau of Industry and Security (BIS) regulations reveals a mechanism that could make this trade a logistical nightmare.
At the heart of the new system is not free trade, but an unprecedented inspection regime. Every batch of H200 processors destined for a Chinese customer must physically pass through an independent test laboratory. This is not an administrative formality, but a technical bottleneck. These labs are tasked with empirically verifying the AI performance of each chip, making sure that the hardware going to the Middle Kingdom is within an acceptable, ‘civilian’ framework. For Nvidia, this means extending the supply chain by weeks, if not months.
Even more interesting is the financial and volume layer of this agreement. Washington has introduced a rigid parity whereby China cannot receive more than 50 per cent of the volume of chips sold to US customers. In practice, this means that supply to the Chinese market is held hostage to US demand. If the US cloud giants slow down their purchases, exports to China will automatically slow down, regardless of the needs of companies there. Added to this is President Trump’s announced 25 per cent levy on the US government, which de facto turns export controls into a new source of budget revenue, shifting the cost of geopolitics directly onto the balance sheets of technology companies.
The situation is complicated by the fact that Chinese technology companies, including giants such as ByteDance and Alibaba, have already managed to place orders for more than two million H200 chips. Meanwhile, Nvidia’s current stock is a fraction of that number. Jensen Huang therefore faces a resource allocation dilemma in an environment where every order from China is fraught with political risk and the need to prove that the hardware will not go to the military.
Paradoxically, enthusiasm on the Chinese side is being tempered by Beijing itself. According to reports from the market, Chinese authorities are accurately reading the move as an attempt to make their AI sector dependent on controlled supplies from the US and are suggesting domestic companies exercise restraint by promoting local alternatives from Huawei. As a result, what was supposed to be Nvidia’s triumphant return to China may turn out to be a game in which both sides have their hand on the brake.
