- This report was compiled from interviews with six high-level sources who were briefed or, in some cases, overheard the discussions.
Inside the room: On Thursday, as the spy scandal rocked the administration, Lutnick met in the Situation Room with Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, U.S. Trade Representative Jamieson Greer and National Security Advisor and Secretary of State Marco Rubio.
- During the meeting, Bessent confronted Lutnick about why his department resisted implementing export controls, particularly on Megaspeed, the company at the center of the espionage scandal. The group sided with Bessent.
- Lutnick seemed to agree, but then muttered under his breath, “I have to check with the president.” »
Point of friction: Lutnick’s seemingly innocuous comment raised concerns, according to the sources, because officials repeatedly believed the Commerce Department would impose export controls, but nothing would happen.
- “He’s dragging things out,” one official said, describing how Lutnick had already met privately with the president to change his mind on the export limit.
- “This is an ongoing concern regarding Howard and this issue,” said another.
This time, someone in the room bluffed and said, “Great. Why don’t we do it today?
- Around 5 p.m., the group headed to the Oval Office.
- Trump called technical advisor Elon Musk and agreed to move forward. Musk supported Rubio, Bessent, Greer and Hegseth’s arguments for imposing controls, while Lutnick warned it would “start a trade war with China.”
- “Everyone responded that China was already doing to us what Lutnick had warned,” one source said.
Behind the scenes: With Lutnick as the only holdout, Trump made his decision: “Let’s do this.” But once everyone was outside the Oval Office, Lutnick proposed a new delaying tactic.
- “I’ll develop some options and come back,” he said.
- “Everyone was like, ‘No, no, the decision is made. Just fucking execute,'” a source said. “Well, that still hasn’t happened.”
The other side: Commerce Department spokeswoman Kristen Eichamer denied that Bessent confronted Lutnick and would not immediately comment on the other allegations.
Flashback: On at least three occasions – in May, August and November 5 – Trump approved taking action against alleged diversions of Nvidia chips to China.
- But Lutnick and Deputy Commerce Secretary Jeffrey Kessler resisted pressure from Bessent and others to move forward.
- In May, a highly classified memo warning about Jensen Huang’s relationship with Alice Huang, a Megaspeed employee suspected by U.S. intelligence of being a Chinese agent, was shared with the president and other officials.
- In a subsequent meeting, Bessent, Director of National Intelligence Jay Clayton, Hegseth and White House officials pressed Lutnick and Kessler to act, the source said, “and they refused.”
Catch up quickly: The Trump administration announced last year that it would ease export controls on sales of Nvidia H200 chips to China – something Nvidia has been pushing for.
- Trump took a more lax approach to export controls to China, agreeing to allow the sale of Nvidia’s older but still powerful H200 chips in exchange for a 25% tariff.
- Long before his affair with Alice Huang, Jensen Huang had insisted on exploiting the Chinese market.
- The CEO at the center of an AI boom, Trump is determined to win, has largely succeeded in convincing Trump and Lutnick that selling less powerful chips to China is good for national security because it prevents China from developing its own alternatives and keeps the adversary dependent on the United States.
The bottom line: While Lutnick oversees the department that is at the center of export control policy, Trump is the ultimate decision-maker.
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