Trump’s demand that Nvidia pay a cut of its China sales in exchange for export licenses is illegal. Companies and states can sue to stop it.
The Trump administration is taxing chip exports without congressional authorization. In August 2025, President Trump announced he would grant Nvidia export licenses to sell its H20 chips to China, on the condition that the company pay 15 percent of its revenues from those sales to the U.S. government. Trump announced he was extending the approach in December 2025: 25 percent for Nvidia’s advanced H200 chips, with similar arrangements for AMD and Intel. On Jan. 14, Trump formally imposed the 25 percent tax via proclamation. Revenue-for-access is now the administration’s export control policy for advanced artificial intelligence (AI) chips.
This is illegal. The Export Control Reform Act (ECRA) expressly prohibits the Bureau of Industry and Security (BIS) from charging any “fee” in connection with issuing export licenses, and a percentage of sales revenue is a “fee” under ECRA. More fundamentally, conditioning market access on payments to the federal treasury is taxation, a power that belongs exclusively to Congress. The executive cannot impose new taxes without congressional authorization, no matter what it calls the taxes. The revenue sharing conditions may also violate the Constitution’s Export Clause, which prohibits any “Tax or Duty” on exports.
The good news is that companies and customers in the AI supply chain have standing to challenge the revenue sharing conditions. Trump’s statements suggest that the licenses would not have been issued without the payments. Anyone injured by the licenses can therefore trace that injury to the illegal revenue sharing condition. That includes competitor chipmakers now facing increased competition in China, cloud providers who may lose Chinese customers to newly available chips, AI companies competing with the Chinese firms that receive the chips, and U.S. customers whose chip orders may be delayed or more expensive due to the Chinese demand unleashed by the licenses. Depending on their tax laws, some states may have standing as well.
Section 4815(c) of ECRA provides that “[n]o fee may be charged in connection with the submission, processing, or consideration of any application for” an export license. The revenue sharing conditions are “fee[s]” charged in connection with applications for export licenses—the deals apply to the sales that the export licenses authorize. That places the condition outside the BIS’s statutory authority to impose.
The BIS may argue that the structure of the 25 percent charge sidesteps ECRA’s fee bar. The structure has two steps. First, it requires that H200s licensed for sale to China must first be routed from Taiwan, where the chips are made, to the United States, where they will undergo “independent, third-party testing” before export to China. Second, it imposes a 25 percent duty on all H200s imported into the United States not destined for domestic use, with the predictable consequence that the duty falls only on chips moving through the China-license pathway. In Trump’s words, “we’re allowing them to do it [export H200s to China] but the United States is getting 25 percent of the chips in terms of the dollar value.”
On paper, that sequencing separates the payment and the license application, allowing the government to argue that no “fee” is charged “in connection with” the BIS’s consideration of a license. But the separation is formal, not functional: The duty is the price of accessing the licensing channel, and the government has simply relocated the collection point from the BIS’s licensing desk to the customs entry process. The scheme therefore accomplishes indirectly what Congress forbade directly—monetizing export licensing.
Judicial review is available over the BIS’s authority to charge fees. ECRA withdraws review under the Administrative Procedure Act (APA) over the BIS’s actions, but challenges to an agency’s statutory authority are still reviewable when the agency “plainly acts in excess of its delegated powers and contrary to a specific prohibition in the statute that is clear and mandatory.” Section 4815(c) qualifies. It’s a straightforward command that “no fee may be charged” in connection with export licenses. This distinguishes it from the two prior cases that have challenged the BIS’s authority, in which the plaintiffs could not identify a specific statutory command the BIS violated.
The BIS may argue that courts should refrain from judicial review because the matter implicates national security and foreign policy issues. But the challenge to the BIS’s authority concerns only the revenue sharing conditions, not the BIS’s technical determinations. Trump’s own remarks when announcing the deal he struck on H20s—“If I’m going to do that, I want [Nvidia CEO Jensen Huang] to pay us as a country something”—confirm the condition had nothing to do with national security or foreign policy concerns.
The Revenue Sharing Conditions Violate Separation of Powers