House Democrats Open Second Nvidia Probe, Alleging Trump "Scheme" on China Chip Sales

House Democrats launched a formal investigation Thursday into the Trump administration's approval of advanced Nvidia chip sales to China, sending a scathing letter that alleges a "scheme" to extract a 25 percent tariff on exports while sidestepping national security reviews. The inquiry, led by Rep. Richard Neal (D-Mass.) and Sen. Ron Wyden (D-Ore.), is the second congressional probe opened this week; Republican-led committees on China, Foreign Affairs, and Intelligence have already demanded testimony from former CEO Jensen Huang, who resigned Thursday amid escalating allegations of affairs with a suspected Chinese intelligence operative and, separately, with two Nvidia subordinates.

The Alleged Arrangement

Neal and Wyden, the top Democrats on the House Ways and Means and Senate Finance committees, wrote to Commerce Secretary Howard Lutnick demanding preservation of all records related to the export of Nvidia H200 chips to Chinese buyers. In their letter, they describe a three-step process: chips manufactured in Taiwan would be shipped to the United States for a "security review," assessed a 25 percent tariff under Section 232 of the Trade Expansion Act of 1962—a statute designed to restrict imports that threaten national security—and then licensed for re-export to China by the Commerce Department [1].

"Congress wrote Section 232 to give the President a tool to take action against imports he has determined to pose a national security threat; Trump's use of the statute appears to have done the opposite, undermining U.S. national security and putting Americans at risk," the lawmakers wrote [1].

The arrangement follows an August 2025 deal in which Nvidia and AMD agreed to share 15 percent of their China chip revenue with the U.S. government in exchange for export licenses, as reported by the Associated Press at the time [2]. The Democrats' letter questions why the administration moved from a revenue-sharing model to a tariff structure that, in their view, functions as an unconstitutional export tax.

Huang's Resignation and the Spy Allegations

The investigation lands hours after Nvidia confirmed Huang's resignation. The board accepted Huang's resignation on Wednesday; Nvidia announced it Thursday [4]. The 63-year-old co-founder stepped down after the New York Times reported he had a romantic relationship with Alice Huang [4], a Singapore-based executive at Megaspeed, a company U.S. officials suspect of routing advanced Nvidia chips to China. Alice Huang is alleged to be a Chinese intelligence asset; she is not related to Jensen Huang [2].

Subsequent reports allege two additional affairs: one with Kimberly Powell, Nvidia's vice president of healthcare, who reports directly to the CEO, and a third with another unnamed Nvidia employee [4]. Huang admitted to infidelity in a letter to employees but did not name Alice Huang, linking his conduct only to "national security concerns raised in news reports" [4].

Donations, Briefings, and a Stalled Crackdown

The Democrats' letter draws a line between the export approvals and political contributions. It notes that Nvidia and Huang donated at least $26 million to Trump's pet projects, and that the H200 deal was approved after Trump was briefed on Huang's "compromised position" [1][2].

According to the New York Times, a secret memo circulated in the Trump administration in spring 2026 warning that Alice Huang was a spy for China's Ministry of State Security. Secretary of State Marco Rubio supervised the memo's drafting. Trump was briefed on the surveillance findings in late 2025 but took no action [4].

Axios reported Wednesday that Trump ordered a crackdown last week on companies suspected of diverting Nvidia chips to China, but that Lutnick "stood in the way and at least slow-walked the order's execution" [4]. The Democrats' letter also cites a Times report that the Commerce Department suspended its investigation into Megaspeed's suspected smuggling "following outreach from the company" [1].

Two Investigations, Different Powers

The Republican-led probe—chaired by Rep. John Moolenaar (House Select Committee on China), Rep. Brian Mast (House Foreign Affairs), and Rep. Rick Crawford (House Intelligence)—has threatened to subpoena Huang. On Thursday, Mast said Huang agreed to testify behind closed doors before Thanksgiving, with video recording and transcription expected [2][4].

As minority members, Neal and Wyden can request documents and ask questions but cannot compel testimony or issue subpoenas. Their letter focuses on the administration's use of trade authority and the Commerce Department's vetting of Chinese buyers. The lawmakers point to a Times report that Commerce approved dozens of Chinese firms to handle H200 chips, some with ties to sanctioned entities, and that the department "passed the probe off to the Department of Justice" without public confirmation [3].

Separately, Sens. Elizabeth Warren (D-Mass.) and Chris Coons (D-Del.) sent their own preservation letter Wednesday to Lutnick, Secretary of State Rubio, and White House Chief of Staff Stephen Miller, warning that Huang's resignation "does not absolve him, other executives, or the company as a whole of responsibility for putting our national security at risk" [4].

What Remains Unknown

• Whether the Section 232 tariff mechanism was formally published or implemented through informal guidance.
• The full list of Chinese companies approved for H200 purchases and their ownership structures.
• Whether the Justice Department has assumed the Megaspeed investigation and its current status.
• The extent of Trump's personal involvement in the export decisions versus delegation to Lutnick.
• What Huang will disclose in his closed-door testimony, and whether it will be made public.

The White House said Thursday that Trump "maintains complete confidence" in Lutnick, though Reuters reported senior officials are discussing his future [4]. Nvidia shares fell more than 11 percent in pre-market trading before paring losses; the company named CFO Colette Kress interim CEO and appointed former Synopsys CEO Harvey Jones as its first-ever board chair [4].