Lutnick Blocks Three Trump Orders on China Chip Crackdown, Axios Reports

President Trump approved a crackdown on chip diversion to China three separate times — in May, in August, and on Nov. 5 — and, according to Axios reporting by Maria Curi and Marc Caputo, Commerce Secretary Howard Lutnick and his deputies resisted carrying out each order. The Axios reporters put it plainly: "One administration official has repeatedly stood in the way: Commerce Secretary Howard Lutnick," noting that virtually every other administration official supported the crackdowns, as did Elon Musk.

The claim demands scrutiny, and the documented record gives it weight. What follows is what the reporting establishes, and what it leaves unanswered.

What did Commerce do — and not do — about Megaspeed?

Commerce Department agents opened their investigation of Megaspeed, the Singapore-based data center firm that bought billions of dollars of Nvidia chips and is suspected of diverting them to China, in 2024 under the Biden administration. Then the trail bends. The New York Times reported that in 2025, Nvidia's general counsel emailed those agents directly, citing permission from Lutnick's export-control chief, Jeffrey Kessler. Commerce soon paused its work on the investigation.

The pattern repeated at the entity list. The State Department, Treasury Department, Energy Department and the Pentagon pushed, the Financial Times reported, to blacklist Megaspeed. Senate Intelligence Committee Chair Tom Cotton wrote to Lutnick directly in October 2025 urging a harder look. Commerce refused — and did not add a single company to the entity list for more than a year, CNN reported.

In May, Commerce cleared roughly 10 Chinese companies to buy H200 chips, Reuters reported. The beneficiaries are named; the internal rationale is not.

What did the classified memo say?

Secretary of State Marco Rubio oversaw the drafting of a highly classified assessment built on electronic surveillance of Alice Huang, the suspected Chinese spy and Megaspeed executive. Its conclusion, per the Times: China's Ministry of State Security recruited her to gather intelligence on Jensen Huang and on America's AI chips. Officials assessed Beijing's aims may have extended to steering Nvidia into pressing Washington for greater Chinese access to its most advanced chips.

Axios reported that Lutnick received the memo directly before Trump's May trip to China. Jensen Huang was initially left off the business delegation, then added at the last minute during an Alaska refueling stop. Nvidia's board has since opened an investigation into a purported foreign influence operation; Huang resigned Thursday after reports of affairs with a direct report and with Alice Huang. Nvidia directors also face shareholder lawsuits in Delaware over oversight failures.

Just last week, Axios reported, Treasury Secretary Scott Bessent confronted Lutnick over the department's resistance, particularly on Megaspeed, with virtually all other administration officials siding with Bessent. Lutnick, by that account, continued to stall.

Who is turning against Lutnick?

The pressure comes first from inside the cabinet. Treasury Secretary Scott Bessent, Defense Secretary Pete Hegseth, U.S. Trade Representative Jamieson Greer, Secretary of State Marco Rubio and Director of National Intelligence Jay Clayton all reportedly favor a far tougher approach.

Republicans in Congress have joined. Sen. John Kennedy says Lutnick must explain himself "in front of God and country." Rep. Bill Huizenga calls his responsiveness to Congress "frustrating." Reps. John Moolenaar and Brian Mast, chairs of the House China and Foreign Affairs committees, have made their unhappiness equally vivid. Democrats demand records, and after last week's midterms they take the committee gavels in January — with subpoena power.

What conflicts follow Lutnick into the hearing room?

The files are thick. In January, Commerce announced a tentative $1.6 billion deal giving the government roughly a 10% stake in USA Rare Earth. The company raised $1.5 billion privately and chose as lead placement agent Cantor Fitzgerald — the firm Lutnick led for decades and which his son Brandon, 27 when he took over, now chairs. By the lawmakers' account, the company's CEO credited Lutnick's personal involvement. Sens. Elizabeth Warren, Ron Wyden and Chris Van Hollen have pressed for documents since February.

Crypto compounds the problem. Cantor has custodied Tether's reserves since 2021, and Sen. Richard Blumenthal says Cantor's stake swelled from about $600 million to an estimated $10 billion since Trump returned to office. A trust for Lutnick's children reportedly borrowed from Tether around the time he transferred his Cantor stake to them. Cantor also launched the bitcoin treasury company Twenty One Capital with Tether.

Add the Epstein file: Lutnick long said he cut ties in 2005, but Justice Department records showed a 2012 family visit to the island, a shared investment and emails as late as 2018 — records critics called "grossly deceptive." Rep. Thomas Massie called for his resignation in February; his closed-door House Oversight testimony in May left panel Democrats calling him evasive.

Lutnick's defenders argue he merely executed a broader implicit trade in which U.S. chips flow east and Chinese rare earths flow west. The argument has three weaknesses: U.S. rare earth reserves are substantial and need investment, not imports; the implicit deal did not stop Rubio or Bessent from objecting; and Trump himself has endorsed Tim Cook as Nvidia's next CEO.

The unanswered question is the oldest one: whose interests came first.