Trump Wants to Command Bosses Like Xi. He Is Failing

Ignore for a moment Donald Trump's shakedown of Nvidia, in which he has allowed the world's most valuable firm to resume limited exports of its artificial-intelligence (AI) chips to China in return for a 15% cut of the proceeds for Uncle Sam.

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Think instead of the argument about whether it is wise to let China have access to one of America's most coveted technologies.

One side of the debate wants to flood China's market. By permitting Nvidia to resume exports of its dumbed-down H20s to China, the argument is that it will reduce the incentive for China's own chipmakers, such as Huawei, to develop substitutes. That will keep Chinese developers of generative AI hooked on American hardware, and make China less likely to invade Taiwan, where the bulk of the world's cutting-edge chips are made.

The other side takes a tougher approach. Its advocates, including this newspaper, contend that choking off access to the H20s, which are hot stuff in China even if subpar by American standards, would slow the development of Chinese technology just enough for the US to secure an insurmountable lead in the AI race.

Mr Trump alluded to neither of these arguments when he confirmed on August 11th that Nvidia would resume selling H20s to China (AMD, a rival, will sell some of its AI chips, too). Instead he boasted of the haggling that took place between himself and Mr Huang to determine how big a cut America should get in return for the favour (and floated a similar approach for Nvidia's "super-duper-advanced" Blackwell chips).

Contrast that with the quieter way China has used one of its most sought-after resourcesrare earths-as a bargaining chip. When it comes to meddling with markets, America's nickel-and-dimer-in-chief has much to learn from Xi Jinping.

A lot about the way Mr Trump has handled chip exports to China pales besides the way America's rival has used rare earths for leverage.