What to know about Trump’s plan to take 15% of AI chip sales to China

Here’s what to know:

Is the arrangement legal?

The administration will have to come up with a new structure for export licenses being approved by the Commerce Department’s Bureau of Industry and Security, part of its bid to reshape exports of chips critical for training artificial-intelligence models.

They will need a creative approach because the Export Control Reform Act, which gives BIS authority to enact export controls, says no fee can be imposed in connection with license applications. And the Constitution prohibits the federal government from imposing taxes or duties on items exported from the U.S.

But many chips are manufactured overseas, so one option is for BIS to create new requirements for foreign-made items that need export licenses, industry experts said. Or U.S. officials could come up with a general purpose for the fee, such as helping U.S. leadership in science and technology.

“There isn’t an existing mechanism to do this," said Aaron Bartnick, who worked in the Office of Science and Technology Policy during the Biden administration.

Has the text of the deal been released?

Neither side has released details of the agreements. People close to them say many of the details and the financial structure still need to be worked out.

How much money could the government make?

Bernstein analysts estimate that Chinese demand for Nvidia’s H20 AI chip in 2025 before an April export ban was roughly 1.5 million chips, or more than $20 billion in sales. That means the administration could bring in billions of dollars from the new agreement, depending on Nvidia’s export volumes.

Is everyone on board?

The administration could face opposition to the deal from national-security hawks who have worried that sending U.S. technology to China will boost the country’s AI capabilities and military. Many have opposed the chip exports and worry that this type of activity as part of U.S.-China trade talks gives priority to business interests rather than security concerns as intended.

“Export controls exist to protect America, not to generate revenue," said Rep. Raja Krishnamoorthi, (D., Ill.), the top Democrat on the House Select Committee on China.

With the agreement, the administration is signaling that security priorities can take a backset for the right price, some experts said. “A 15% fee won’t buy back the national security we lose selling AI chips to China," said Jimmy Goodrich, a senior adviser to the think tank Rand who focuses on tech issues.

Trump defended the framework at a Monday news conference, saying that the H20 is obsolete and that he wants to let Nvidia Chief Executive Jensen Huang compete with Chinese technology companies. “He’s selling an old chip," Trump said.

What’s the bigger picture?

The agreements illustrate how AI chips have become strategic commodities and taken center stage in trade talks between the U.S. and China.

The Trump administration has said it is comfortable exporting Nvidia’s H20 because it isn’t a top performing chip. The company specially designed it for the Chinese market to comply with export controls. Security hawks say it is still effective enough at certain tasks to boost China’s AI industry.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com