Trump Administration Divided Over China Chip Smuggling

Differences have reportedly emerged between two senior members of US President Donald Trump's administration over taking action against a company allegedly involved in smuggling advanced computer chips to China. US Treasury Secretary Scott Bessent reportedly questioned Commerce Secretary Howard Lutnick during a White House Situation Room meeting about why Singapore-based Megaspeed had not been added to the Entity List despite allegations of its involvement in supplying advanced chips to China. The meeting focused on concerns that the company was operating under the influence of Alice, a Chinese intelligence operative based in Singapore. Lutnick reportedly indicated that stricter restrictions could be considered but stressed the need to obtain Trump's approval before proceeding. Defence Secretary Pete Hegseth, US Trade Representative Jamieson Greer and Secretary of State Marco Rubio were also reportedly present. Following the discussion, the officials approached Trump in the Oval Office, where he reportedly consulted SpaceX CEO Elon Musk over the issue.

According to media reports, Lutnick warned that blacklisting Megaspeed could reignite a trade war with China. However, Musk reportedly supported imposing restrictions, following which Trump gave the proposal his approval. Lutnick has also faced allegations of delaying similar enforcement measures in the past. Reports suggest that Trump had approved proposals on three occasions over the past year to restrict companies suspected of diverting Nvidia AI chips from the US to China, but the measures were not fully implemented. The Commerce Department's Entity List is a powerful tool that restricts listed companies from accessing American technology. Several Chinese firms were added to the list during Trump's first administration and Joe Biden's presidency. However, no new company has reportedly been added over the past year, marking an unusual pause in US restrictions on Chinese technology firms amid a temporary trade truce between the two countries.