Trump's 25% cut on Nvidia chips sold to China backfired — Beijing won't approve a single H200 purchase, costs Huang $30B
Trump's 25% cut on Nvidia chips sold to China backfired — Beijing won't approve a single H200 purchase, costs Huang $30B
Aditi GangulyMon, May 25, 2026 at 7:45 PM UTC
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A photo of Donald Trump wearing a yellow tie
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President Donald Trump confirmed Friday what Nvidia (NASDAQ:NVDA) investors have been quietly worrying about for months. Speaking to reporters aboard Air Force One after a two-day summit with Chinese President Xi Jinping, Trump said Beijing has refused to approve purchases of Nvidia's H200 AI chips, and the reason is straightforward.
"They have a much higher level than H200. China needs it and yeah it came up," Trump said (1). "They choose not to buy because they want to develop their own. I think something could happen on that.”
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Nvidia stock fell 4.4% last Friday, giving back the all-time high it had touched a day earlier on news that the U.S. Commerce Department had approved the sale. For investors trying to read where Nvidia's China revenue is heading, this week was supposed to be a turning point.
Instead, it now looks like confirmation that the turning point has already passed.
What actually happened
Reuters had recently reported that the Commerce Department had cleared roughly 10 Chinese firms — including Alibaba, Tencent, ByteDance and JD.com — to purchase up to 75,000 H200 chips each through approved distributors like Lenovo and Foxconn (2). At current pricing, that ceiling caps initial sales at roughly $15-$20 billion in revenue (3). KeyBanc analyst John Vinh has modeled total Chinese demand at around 1.5 million units annually, or about $30 billion in revenue, if the licensing framework expands (3).
Nvidia CEO Jensen Huang was added to the White House delegation at the last minute, joining Trump in Alaska en route to Beijing in what was widely read as an attempt to push a deal across the line.
It did not work. Not a single H200 had shipped to a Chinese buyer, and Beijing had quietly steered domestic firms away from following through on the orders they placed earlier in the year.
Read More: Millionaires under 43 hold just 25% of their wealth in stocks — here is where their money is going instead
Why this is a bigger problem than it looks
Several pieces of evidence suggest China has made a strategic decision rather than a tactical pause.
Commerce Secretary Howard Lutnick told a Senate hearing last month that Chinese firms are "trying to keep their investment focused on their own domestic" suppliers, including Huawei (4).
DeepSeek, one of China's leading AI labs, launched its V4 model on April 24 — optimized for Huawei's Ascend chips rather than Nvidia hardware (5). ByteDance has lifted its 2026 AI capex to roughly $30 billion, with a larger share now flowing to domestic chipmakers (6). Huawei's flagship Ascend 950PR has seen prices rise roughly 20% on demand strength following the DeepSeek launch (7).
The fee is structurally tied to a routing requirement. U.S. law does not permit direct export fees, so chips have to physically pass through U.S. territory before re-export to China — a workaround that lets the Treasury collect 25% of every sale (10).
Beijing's objection is reportedly less about the fee than the routing itself: Reuters reported the arrangement has prompted unease in China over potential tampering or hidden vulnerabilities, and the State Council recently issued two supply-chain security regulations aimed at eliminating foreign-tech dependencies in critical infrastructure (10).
Removing the fee would likely require restructuring the framework, not just dropping a tax line — which makes the path to "yes" narrower than it looks.
Huang has acknowledged that Nvidia's official market share in China is now zero, down from roughly 95% before U.S. export curbs took hold (8). In its most recent 10-K, Nvidia said it is "effectively foreclosed from competing in China's data center computing market" and assumes no data center compute revenue from the region in current guidance (7).
The bear case has a counterweight, though.
Huang said in January that Chinese demand for the H200 was "very high," with orders exceeding two million units before Beijing's pause (9). And Wall Street is still bullish on the broader thesis — Cantor Fitzgerald sits at a $350 price target, Bank of America at $320, UBS at $275 and Melius Research at $380 (3). The China story is one variable in a stock that has continued to rally on hyperscaler capex and sovereign AI deals elsewhere.
A lackluster response to stellar earnings
Nvidia delivered another blockbuster quarter, with revenue soaring 85% year over year to $81.52 billion in fiscal Q1 2027 (11). On paper, the chip giant continues to dominate the AI boom, powering everything from massive data centers to next-generation enterprise software.
But despite the eye-popping numbers, investors weren’t exactly rushing to celebrate — as China continues to cast a long shadow over Nvidia’s future.
CEO Jensen Huang admitted the company has effectively pulled back from competing in the region, saying Nvidia has “largely conceded” the market to Chinese tech giant Huawei. And based on Huang’s comments, he doesn’t expect those geopolitical and regulatory challenges to disappear anytime soon.
“I don’t have any expectation, which is the reason why we put all of our guidance, all of our numbers, all the expectations that I’ve set with all of our analysts and investors to invest nothing, to expect nothing,” Huang added.
That’s a notable shift for a company that once relied on China for roughly one-fifth of its data center business (12). While the AI boom is still driving explosive growth, losing access to one of the world’s largest technology markets could create longer-term headwinds.
Don’t rely on just one stock
Nvidia’s latest report also highlights an important lesson for investors: Even some of the most valuable companies can disappoint the market when expectations become too high.
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Even after beating forecasts, Nvidia stock slipped following the report — a sign that the company’s explosive growth rate is viewed as a baseline rather than a surprise. Investors appear to be asking a tougher question now. It’s not simply whether Nvidia can grow, but whether it can keep going at this extraordinary pace indefinitely.
The latest earnings report and investor reaction suggest that Nvidia “seems to no longer be viewed as the market’s AI darling,” according to Ryan Lee, senior vice president of product and strategy at Direxion (13).
Concentrating too heavily in a single stock can be risky, no matter how dominant the company appears today.
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Get expert stock picks
At this point, many investors may feel like they have already missed Nvidia’s meteoric rise.
The AI chip giant has become one of the market’s biggest success stories, but after years of explosive gains, expectations surrounding the company are now incredibly high. For investors looking for the “next Nvidia,” blindly chasing market trends may not be the best strategy.
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— With files from Rudro Chakrabarti
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see oureditorial ethics and guidelines.
Bloomberg (1); CNBC (2); Top1 Markets (3); Implicator (4); Fortune (5); South China Morning Post (6); Tom's Hardware (7); Yahoo Finance (8); Blockonomi (9); Reuters (10); CNBC (11), (12); Investopedia (13)
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