Illegal and unwise monetization of trade policy is underway. 
More Than a Bit Unusual
Bloomberg reports Trump Bid for Cut of Chip Revenue Risks ‘Dangerous World’
Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay the US government 15% of revenue from some chip sales to China. The chips — Nvidia’s H20 AI accelerator and AMD’s MI308 chips — were earlier banned by the Trump administration and require export licenses to sell.
“To call this unusual or unprecedented would be a staggering understatement,” said Stephen Olson, a former US trade negotiator now with the Singapore-based ISEA — Yusof Ishak Institute. “What we are seeing is in effect the monetization of US trade policy in which US companies must pay the US government for permission to export. If that’s the case, we’ve entered into a new and dangerous world.”
The chip-payment arrangement may face legal challenges because it could be construed as an export tax, something that’s not allowed under the constitution, trade experts said. The proposal is the latest direct government intervention into business and finance since Trump returned to the Oval Office in January. As well as a chaotic tariff campaign and persistent criticism of a sitting Federal Reserve chairman, Trump has used his Truth Social platform for everything from calling on CEOs to resign to offering commentary on corporate advertising campaigns.
The Nvidia and AMD revenue-sharing deals may now prompt the White House to target other industries and goods, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore.
“The sky is the limit,” she said. “You could come up with all sorts of company-specific, country-specific combinations that would say, ‘No one else can trade, but if you pay us directly, then you get the ability to trade.’”
The Trump administration is already in the midst of a lawsuit related to his use of the International Emergency Economic Powers Act to levy what he called “reciprocal” tariffs on the world. On Friday, Trump warned of a “GREAT DEPRESSION” if US courts ruled that his tariffs were illegal.
Export Coercion
The BBC reports Nvidia and AMD to pay 15% of China chip sales to US
The US had previously banned the sale of powerful chips used in areas like artificial intelligence (AI) to China under export controls usually related to national security concerns.
Security experts, including some who served during President Donald Trump’s first term, recently wrote to the administration expressing “deep concern” that Nvidia’s H20 chip was “a potent accelerator” of China’s AI capabilities.
Nvidia told the BBC: “We follow rules the US government sets for our participation in worldwide markets.”
Unconstitutional
Q: Are export tariffs legal in the US?
A: No, the United States Constitution prohibits export tariffs.
Export Clause: Article I, Section 9, Clause 5 of the US Constitution explicitly states: “No Tax or Duty shall be laid on Articles exported from any State”.
Purpose: This clause was a compromise to protect the economies of Southern states that relied on exporting agricultural products.
Unwise
Chip exports either represent a security risk or they don’t.
Collecting an export tax does not mitigate security risks. If there is a security risk, Trump should ban the exports.
But if there is no security risk, what is Trump’s action other than an export tax or an illegal shakedown?
Trump’s Hyperbolic Idiocy
Tariffs are having a huge positive impact on the Stock Market. Almost every day, new records are set. In addition, Hundreds of Billions of Dollars are pouring into our Country’s coffers. If a Radical Left Court ruled against us at this late date, in an attempt to bring down or disturb the largest amount of money, wealth creation and influence the U.S.A. has ever seen, it would be impossible to ever recover, or pay back, these massive sums of money and honor. It would be 1929 all over again, a GREAT DEPRESSION! If they were going to rule against the wealth, strength, and power of America, they should have done so LONG AGO, at the beginning of the case, where our entire Country, while never having a chance at this kind of GREATNESS again, would not have been put in 1929 style jeopardy. There is no way America could recover from such a judicial tragedy, but I know our Court System better than anyone, there is no one in history that has gone through the trials, tribulations and uncertainties such as I, and absolutely terrible, but also amazingly beautiful, things can happen. Our Country deserves SUCCESS AND GREATNESS, NOT TURMOIL, FAILURE, AND DISGRACE. GOD BLESS AMERICA!
So, we collect tariffs, from US businesses and consumers, and it would be impossible to pay them back.
Yet, Trump says he’s considering rebate checks for Americans based on tariff revenue
President Trump on Friday said he’s considering issuing rebate checks for Americans based on the billions in new tariff revenue collected by his administration.
The federal government has collected about $100 billion in tariff revenue since the Trump administration instituted its higher import duties earlier this year, which could increase to $300 billion per year, Treasury Secretary Scott Bessent told Fox Business’ “Mornings with Maria” on Tuesday.
Somehow it would be impossible to pay back $300 billion out of a budget of $7 trillion. Yet, possible to send out rebate checks of some of that money.
If you believe this, you are as economically illiterate as Trump is. Where the H is any backbone from Republicans on these obvious lies?
Mercy, when and where does this unconstitutional economic stupidity end?
I can only imagine the howls from the MAGA hypocrites if Biden had done anything like this. Instead we have silence.
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My U1 (15-weeks unemployment recession indicator) is very elevated.
Hoot of the Day
Trump claims if tariffs are rolled back “It would be 1929 all over again, a GREAT DEPRESSION!”
Might I suggest the opposite?
Could the stock market strength be on the basis the market expects the idiotic reciprocal tariffs to be rolled back?
Export Clause: Article I, Section 9, Clause 5 of the US Constitution explicitly states: “No Tax or Duty shall be laid on Articles exported from any State”.That is the interstate comerce clause. It ensured no individual state, such as Virginia, can impose a tax on another state such as West Virginia. It does not apply to foreign relations.
Tariffs. Holy cow, a nation has to protect itself against mercantilist aggression by foreign powers and to protect its citizens from undercutting standards of living the culture and well being.
You do not understand the word “EXPORT”
Do you?
An export tax on food would solve a lot of problems. Farm labor shortages , water shortages, top soil loss, erosion and depletion.
There is probly some metric such as … Every ton of exported food is a loss of a wheel barrow of prime topsoil. It adds up.
A tax exclusion for humanitarian export of food would be appropriate.
one should look at the details. The wording of the law and intent was for a tax on goods, Exceptions can occur when the cost of obtaining a license for example, applies to a specific good. One learns there is no 100% regarding a law. There are always exceptions.
Thanks for the valuable info, Larry.
Where did you get your international trade law degree?
Maybe Trump owns shares in those companies, and hopes to boost their value?
With regards to making decisions – Trump gets confused between being President, and being a private citizen.
Why won’t he come up with a reason to tax other exports?
Everybody blames the front man but he’s just a mouth piece something is very wrong with the system.
Wrong end.
Trump does what Trump wants. That has been pretty clear for a decade.
If somebody has control some control over Trump I’d be looking at the Ghost of Epstein or Putin.
If this isn’t tyranny, then nothing is.
We live in interesting times.
Such an odd decision. If the chip sales are a security risk, then you don’t allow them at all.
It will be interesting to see China’s response. They want to become the world’s dominant player in AI, just like they are in so many other areas. This requires a LOT of these chips installed in many Data Centers. And it requires a LOT of electricity.
China is adding a crap load of electricity generation every year. In 2024 they added 477 GW of new electricity generation vs 38 GW added in the US. They will add even more this year. Part of this new generation is for all the Data Centers they are building.
Youse just keep digging your hole deeper. Add to TACO; flakey as fuck. Other world leaders are just going to walk on.
It’s not illegal to raise tariff on importers and exporters. It’s not illegal to raise taxes
on high tech co, Trump’s former enemies.
Article I, Section 9, Clause 5 of the US Constitution explicitly states: “No Tax or Duty shall be laid on Articles exported from any State”.
I guess somehow you live by a legal system separate from the US Constitution
Oddly enough, that’s one of the sections they removed from the website.
Coding error, my ass.
From state to state in the US, like in Germany before Bismarck.
A guy that rapes children doesn’t care about the law.
so you know the facts. please tell.
Trump raped children.
Them’s the facts.
Pics or it never happened.
https://www.yahoo.com/news/articles/fact-check-photo-trump-daughter-130000718.html
There are more. I don’t want to get the pedos all het up though:
https://www.yahoo.com/news/articles/fact-check-photo-trump-daughter-130000718.html
That pic is your fact that he rapes children?? Can you show me where the “fact check” site says it is proof of incest? I’m just going with my facts that you’re just not very smart.
It was not illegal to F**k whores, young and old, in the seventies/ eighties fifty/ forty years ago. NYC was the biggest whorehouse in the world. Epstein assassination by Billie^2 is a different matter. Get them. Go get them !
Your pedophelia has been establish… kindly STFU about it.
U can repeat pedo many times to show your high esteem and morality. U are a lousy salesman !
Radical Dems love Mamdani. They hate Trump. Both have intolerance to billionaires. Raise tariffs. Raid AMD and Mag7. Send $1K to shingle mums and $10K to small businesses. Skip on IOU from the Fed to the banks and IOU from the gov to the Fed, while piling more debt. Cut debt. Cut debt in repetition, bc the overextended Mag 7 profit machine is infinity. Trump wants to allocate funds from them to better causes, before their ceo will lose it all on AI data centers. A smart, ruthless allocation, that’s his job.
You clearly have no clue of what your talking about. Luckily free speech allows you ignorance to be laid bare for all to see. When the recession hit, and you lose your job and money from your smart investment in the market and crypto, I’m sure you’ll blame the “hard left” and Mamdani, because looking in the mirror and realizing who you really are is too much to deal with.
I don’t hate Mamdani or Trump. Mamdani is Muslim Bros+ LBGT, He is the product of Erdogan, Egypt, Qatar and MBS decades of investments and Anti Israeli sentiment. The UN might give him a booster in Sept. He might fade until Nov 2026. Trump is the product of the forgotten people. He is doing a fine job. He is saving us from the globalists and the “Libertarians”. He will cut gov debt. AMD. 1D: Aug 11 flop ??? 1W: #9. AMD might test Apr or May lows, thanks to Trump’s harsh diet. Most commentators hate me. They can’t stand my ignorance and stupidity. They herd together on Mish. They can’t accept different ideas and different ways of thinking.
Thanks for that Mamdani description. But you don’t have to keep selling him to me! I’m already in!
Actually moderate Republicans hate Trump as he is both a pervert and has no regard for the law or our long standing relationships with our allies.
I am one of them!
>
Or, perhaps I’m a moderate Democrat or Libertarian? Hell, lots to dislike about this polarized system.
I do not vote a party ticket these daze…
Same here frosty. I consider myself an independent. But im finding if harder and harder to vote for any republican. If you vote for one. Your voting for all of them. . .
There are no more republicans in the Republican Party. There are only pedofaschists.
I am an independent. I like Trump. Trump lays good foundations for future generations. When he is gone I might vote for Josh Shapiro.
You are a remora, permanently attached to the giant orange ass.
good for u !
Individuals and corporations pay Federal taxes and specific fees for services, and this revenue is used to fund the cost of providing services, protections, and a regulatory process. These taxes and fees are imposed uniformly across the board, based on a standard tax code that applies to all services and regulatory interactions. This way, our government does not show favor or discriminate against any individual or enterprise. However, what Trump did in the case of Nvidia and AMD is nothing less than selling regulatory favor to specific companies. Trump’s administration has intervened in the private sector more in eight months than any President in memory since Richard Nixon and his infamous price controls.
“These taxes and fees are imposed uniformly across the board, based on a standard tax code that applies to all services and regulatory interactions.”
Except where the privileged indirectly purchase laws, waivers and exceptions, etc.
It has always been so regardless of the administration.
Andrew Jackson (long ago) may have been a bit different.
TACO just TACO’d and gave a 90 day tariff extension on China trade. I guess it’s TACO Monday not Tuesday.
Don’t tax you, don’t tax me, tax that fellow behind the tree.
Sheesh.
Making America a pariah state one idiotic executive order at a time.
I really do not think Trump is doing anything but laying groundwork for spreading blame anywhere but on himself as he has to know his tariff tantrums bring in revenue instantly but the effects of the tariffs on economic supply and demand will take time to sort. I see a trend in the quoted post and other posts and statements, the above preps for deflecting blame and wanting to be remembered for being the most consequential president, at least in his mind. Frankly, I will remember him as the most blow hard president with little positive result except at the southern border. By the time he leaves office his foreign policy and tariff tantrums will mostly be remembered as a total screw up and he will have unwound any admiration for his negotiation skills on the international stage by alienating most if not all our trusted allies.
Why is it taking so long for the courts to decide on the legality of this fiasco? Seems to me a lot of stability could be manifested quickly with some court sanity.
I don’t think he knows any of that. He just spews whatever pops into his rotten, demented head.
The export tax is a controlling measure, and it exists to further Trump’s domination of the economy because his ego demands it, but society’s rules form another annoying impediment because it is a complex culture.
The tax, levied on high technology products that form the backbone of the world economy, limits the ability of corporations to maneuver in the marketplace, as they struggle to face arbitrary seizures of their cash flow.
It is in fact the very arbitrary nature of the tax/seizure that makes it so wrong-headed. Peter Schiff is right: this is a shakedown, and it shows Trump’s constitutional ignorance once again. Didn’t he have any advisors who could have pointed this out to him? And if so, why were they silent?
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Dark . Sport. Blog is my website — come frolic with me there!
Stop mentioning your website in every post.
Last warning
The GOP will stand and clap at Trump “owning trade rules” because they literally don’t care what he does it they can keep “owning the libs.” You know this is a fact, because no matter how many times everyone on the left says it, nobody on the right even cares to pretend it isn’t true. Such a lack of morals and ethics, we maybe have never seen it like this ever.
They know they are deeply inferior to everyone else, and they voted for this assclown to drag everyone else down there with them.
another step towards literal communism.
in addition to everything Mish says, it’s also terrible because the government is a regulator and enforcer of many aspects of Nvidia’s business. how is it going to enforce antitrust, securities laws against a company it’s in bed with??
and I am 100% sure it will come out that Trump will personally benefit from this.
A move toward authoritarianism for sure, but this smacks more of a fascistic move than actual communism. Keeping the terms accurate here is helpful.
i think step towards communism is right because profit sharing is a cousin of ownership. if instead of 15%, the US government got 100% of Nvidia profits, and determined where teh chips could be sold or not sold, it’d be clearer.
Nvidia is now a state-owned enterprise. What nation usually comes up when SOE is discussed?
Another GREAT post Mish, thank you!
First, the chips in question are not made in the US. So, yes it is constitutional.
Trump is simply levying a commiserate tax on AI chips that China in levying on its rare earth minerals.
And yet, they are exported FROM the US.
The chips are produced in Taiwan. Get a grip on reality. They are NOT exported FROM the US.
They are considered a US export.
Thus it’s an export tax
Stop making excuses for obvious bullshit.
Read that part of the COnstitution again.
I believe this is pretty damn clear
https://constitution.congress.gov/browse/essay/artI-S9-C5-1/ALDE_00013596/
Article I, Section 9, Clause 5:
No Tax or Duty shall be laid on Articles exported from any State.
Article 1, Section 9, Clause 5 of the U.S. Constitution prohibits Congress from laying taxes and duties on articles exported from any state. Known as the Export Clause, it applies to taxes and duties, not user fees. The Supreme Court has interpreted the Export Clause to address shipments only to foreign countries, not shipments to unincorporated territories, such as Puerto Rico and the Commonwealth of the Northern Mariana Islands. The Court has also construed the Export Clause as requiring not simply an omission of a tax upon the articles exported, but also a freedom from any tax which directly burdens the process of exporting
For example, in United States v. IBM, the Supreme Court held that an excise ta on insurance premiums paid to foreign insurers for policies insuring exported goods was unconstitutional under the Export Clause. In IBM, the parties agreed that the facts and issue before the Court were largely indistinguishable from an earlier case, Thames & Mersey Marine Insurance Co. v United States in which the Court held that a tax on insuring exports was functionally the same as a tax on exports Applying stare decisis principles, the Court declined to overrule Thames & Mersey Marine Insurance absent additional briefing from the parties on whether the insurance policies subject to the excise tax were so closely connected to the goods that the tax is, in essence, a tax on exports.
Yes, clearly unconstitutional, but unfortunately we lack a functioning Federal Judiciary system. Like other recent challenges to Trump’s aggrandizement of executive power, this likely will be kicked around the Appellate system for several years. The Supremes, if they cannot twist the law sufficiently to render a decision in Trump’s favor, will choose not to intervene until a Democrat is President.
Turns out the founding fathers made a pretty obvious mistake in their checks and balances… only gave guns to one branch.
2nd amendment is on deck now. How long before that disappears from the website?
Again, the chips are not made in the US. They are not exported from the US.
However, I have an idea for you. Claim that all products made anywhere in the world are exports of the US, therefore any tariff is unconstitutional. Bring forth a case in the United States Court of International Trade. Don’t worry the tree judge panel will rule in your favor.
Then reality will strike.
… and there it is… the dumbest thing I’ll read all week.
The hoot of the week and it’s only Monday lol
Damn I hate it when I agree with this author.
I appreciate your honesty
Since when did trump be concerned about the legality of any of his actions. This one appears consistent with many of this others. No doubt more to come.
Apparently, bullying and extortion is permitted at the highest levels of government.
Has always been.
When did national security become unconstitutional? I bet this is to pay for them to put a backdoor in the chips.
Are you as stupid as you sound?
Chip exports either represent a security risk or they don’t.
Collecting an export tax does not mitigate security risks. If there is a security risk, Trump should ban the exports.
But if there is no security risk, what is Trump’s action other than an export tax or an illegal shakedown?
Per previous comments, yes he is as stupid as he sounds.
The choice is they buy chips through front companies (Dubia) or they buy chips with a backdoors? Ergo – the chip no longer represent a security risk but a great opportunity. I think your world is black and white only when you do not like grey.
if national security was the issue he would have KEPT the ban that he imposed.
he removed the ban and now we know why. and i am certain he is personally benefitting some way.
Genius.