Former NSC official says Lutnick did not enforce chip export rules

Commerce Department says Lutnick met all ethics and divestiture terms

Pressure is growing on the Commerce Department and Secretary Howard Lutnick over why Nvidia’s chips have been allowed to be exported to China, despite national security concerns raised by cabinet officials and U.S. intelligence agencies.

Bessent, the Treasury Secretary, accused Lutnick’s department of not putting Megaspeed on the federal trade restriction list. “They were in favor of putting Megaspeed on the entity list for months, but commerce has the pin. Commerce BIS has the pin, and you will have to ask them about their internal processes,” Bessent said.

Liza Tobin, who served as China director for the National Security Council in the first Trump and Biden administrations, said the responsibility sits with Commerce. “Commerce has the pen. Commerce is the agency that has been given the statutory authority by the Congress to regulate the export of these AI chips. They’re the ones that write the rules. They also have a law enforcement role,” Tobin said. “Right now, the whole cover has been blown off this scandal, and Lutnick is there at the center, and it’s clear that he just didn’t do his job in enforcing those rules.”

Tobin said she expects Congress to investigate further. “That is the trillion-dollar question. I think we’re going to find out a lot more as Congress starts to dig into this,” she said, adding that she expects lawmakers to examine whether Lutnick benefited from what she called regulatory capture.

Rob Schmitz, the NPR host, noted that Cantor Fitzgerald, a firm run by Lutnick’s sons Brandon and Kyle, helps place companies that run data centers in Asia, and that the firm has a financial interest in looser chip restrictions that Lutnick was in charge of implementing. Tobin responded: “It absolutely looks like a conflict of interest.”

Tobin said the rest of the president’s advisers — Bessent, tech adviser Michael Kratsios, Director of National Intelligence Jay Clayton, Marco Rubio and others — were on the other side of the issue, advising the president to close loopholes and prevent China from accessing U.S. compute.

The policy in question permits sales of the previous generation of Nvidia chips, the H200, while excluding the Blackwell chips, which Tobin described as the most advanced at the time the decision was made. Tobin said a whole lot of Blackwell chips have either been smuggled or are being accessed by Chinese AI developers overseas in data centers in Malaysia.

Tobin said the president had directed Lutnick to address the issue three times. “He disobeyed the president. The president told him to address this three times, so when is that going to happen?” she said. She said she expects Congress to call Lutnick in to testify.

Tobin said she was advising President Trump when he made the initial decision to put export controls on chips going to Huawei, the giant Chinese telecom, and said the president made that decision himself. She said she does not think the president is deeply wedded to one view or the other, but that he has been persuaded that closing the loopholes is now a good idea.

Tobin also described the role of Jensen Huang in shaping the administration’s thinking. She said Huang explained AI and chips to the president and argued for selling American technology to China. “It was Jensen Huang’s view of the world, telling the president, hey, it’s a good idea to sell American technology. These are just kind of old, outdated chips. It’s a good idea to sell these chips to China and keep China addicted to our tech stack,” Tobin said. She said she thought of Huang as almost the chief technology officer of the United States.

Schmitz noted that the chips are not used only for AI chatbots and have military applications. Tobin said China has a long track record of using American technology to advance its own military ambitions, and said China is really good at making many kinds of technology but remains nowhere close to producing chips anywhere close to the level of Nvidia’s most advanced chips, so anyone in China doing cutting-edge AI really wants these chips. Tobin said the chips could support better missile guidance, hypersonic missiles, undersea warfare and, in time, cyber-capable models that could launch disruptive attacks. “By giving them access to the best American chips, it allows them to get there faster,” she said.

Tobin said the race to lead in AI is winnable for the United States, but “only if we have a government that’s taking it seriously and actually has a strategy.” She said the incoming Congress will be focused on the issue and will pressure officials to close the loopholes.

NPR reached out to the White House and the Commerce Department for a response to Tobin’s comments. A Commerce Department spokesperson sent a statement: “the secretary has fully complied with the terms of his ethics agreement, including all divestiture and recusal requirements, and will continue to do so. He has divested all financial interests in Cantor Fitzgerald, Newmark, and BGC.”