By The fallout from the controversy surrounding Nvidia CEO Jensen Huang and his alleged relationship with a Chinese business executive suspected of working for Beijing is spreading through Washington, raising questions about the Trump administration’s handling of sensitive technology exports and putting Commerce Secretary Howard Lutnick’s position under scrutiny.
Experts have warned that Washington’s growing dependence on powerful technology executives could undermine US national security.
Senior White House officials are discussing whether Lutnick should be pushed out amid growing criticism of the administration’s decision not to blacklist several Chinese companies and questions over its oversight of Nvidia’s chip exports to China, Reuters reported.
Lawmakers from both parties have sought answers about how the Singapore-based company, Megaspeed International was able to continue accessing advanced Nvidia chips despite concerns that it could be helping Chinese clients circumvent US export restrictions.
Alice Huang, the woman Jensen had an affair with, and who is suspected of being a Chinese spy, worked as a senior executive at the company.
It has been alleged that Huang’s relationship with Alice Huang helped facilitate at least $7.5 billion in Nvidia chip shipments to China.
Treasury Secretary Scott Bessent reportedly confronted Lutnick last week over the Commerce Department’s handling of Megaspeed, demanding to know why the United States had not already prohibited sales of advanced AI chips to the company, The New York Times reported.
The criticism comes amid a prolonged pause in the US government’s efforts to expand its trade blacklist of Chinese companies.
The United States has not announced any additions to the list since October 2025, marking the longest gap between new postings in more than a decade.
Reuters reported earlier that the Commerce Department had held off adding China’s AI startup DeepSeek, memory chipmaker CXMT and more than 100 other companies flagged as national security risks.
Concerns about escalating tensions between Washington and Beijing were among the reasons behind the delay.
Lutnick faces heat over Commerce dept’s handling of Megaspeed
The scrutiny of Lutnick centres on the Commerce Department’s handling of Megaspeed, suspected of helping Chinese technology firms obtain advanced Nvidia chips despite US restrictions.
Washington has restricted direct sales of advanced semiconductors to China since late 2022.
However, companies have sought to circumvent those restrictions by establishing data centres in Southeast Asia that can serve Chinese customers.
US officials have been investigating whether Megaspeed diverted Nvidia chips illegally into China, a charge the company has denied.
The New York Times reported in October 2025 that Commerce Department officials were investigating whether Megaspeed, which has close ties to Chinese technology companies, was helping Chinese firms bypass export restrictions through its purchases of Nvidia chips.
Despite those concerns, Nvidia continued selling chips to the company.
The possibility of adding Megaspeed to the US trade blacklist was subsequently discussed at a meeting involving deputies of cabinet officials.
However, Jeffrey Kessler, an under secretary at the Commerce Department, deferred the decision to Lutnick, according to the NYT.
Several Trump administration officials, including representatives of the State Department, later agreed that Megaspeed should be placed on the list.
The Commerce Department, which has final responsibility for issuing the relevant rules, did not act.
That inaction reportedly contributed to frustration across the administration and prompted Bessent’s confrontation with Lutnick.
Bloomberg has also reported that Nvidia’s general counsel intervened in a US government investigation into suspected chip smuggling involving Megaspeed.
Chris McGuire, a senior fellow at the Council on Foreign Relations who served in both the Trump and Biden administrations, described the handling of the matter as a “failure on multiple levels.”
“The Department of Commerce has effectively outsourced export control enforcement to the private sector, which is favoring short-term business interests over long-term US national security,” McGuire said.
“If the Department of Commerce is not willing to cut off organizations that are known to be working with Chinese intelligence services from the most advanced chips, it’s not clear why it is bothering to administer any export controls at all,” he added.
Trump faces questions over what he knew
While Lutnick is facing mounting pressure over the administration’s export control policies, Trump has also been drawn into the controversy.
The New York Times reported that Trump was briefed about the intelligence concerning Huang’s relationship with the woman while aboard Air Force One in May, shortly before the Nvidia CEO joined the president’s trip to Beijing.
Secretary of State Marco Rubio, who also serves as national security adviser, reportedly delivered the briefing.
It was at least the second time in seven months that Trump had been informed about intelligence concerning Huang’s alleged involvement with the woman, the newspaper reported.
The account contradicts Trump’s public assertion on Monday that he had not known about Huang’s relationship when he travelled to China for a summit with President Xi Jinping.
“No, I didn’t hear about it then,” Trump said when asked whether he knew about the alleged relationship before the trip.
Senate Minority Leader Charles Schumer criticised the president on Tuesday, saying reports that Trump had been briefed more than a year earlier raised serious questions about his handling of the matter.
“The press reports that Trump was briefed more than a year ago that Nvidia’s CEO was having an affair with a suspected Chinese spy, and Trump didn’t do anything – anything – about it,” Schumer said on the Senate floor.
“Can you believe that?” he added.
“What a dereliction of duty. He’s supposed to protect America, not China, not his friends,” Schumer said.
“Trump has been busy trying to defend Jensen Huang when he ought to be defending our national security. It’s that simple, it’s obvious.”
Lawmakers demand answers from Lutnick and Huang
The political pressure is now growing on Capitol Hill, where lawmakers are seeking explanations from both the government and Nvidia.
Senator Tim Scott, a South Carolina Republican, sent letters on Thursday to Huang and Lutnick requesting that they testify before the Senate Banking Committee.
“Recent reports raise serious concerns about our national security and the protection of sensitive US technology,” Scott posted on X.
“The American people deserve answers,” he added.
Republican Senator John Kennedy, meanwhile, declined to say whether Lutnick should lose his job when asked about the matter on CNN.
“I don’t know yet,” Kennedy said, adding that Lutnick needed to answer questions publicly and would be called to appear before Congress.
“This is as serious as an aneurism,” he said.
Democratic Senator Elizabeth Warren has also demanded accountability from the Commerce Department.
“Secretary Howard Lutnick and Under Secretary Jeffrey Kessler must explain why they have not closed export control loopholes and act today to ensure our advanced technology is not fueling China’s military,” Warren said.
Experts warn of growing influence of private sector on Washington
Beyond the questions surrounding individual officials, the controversy has exposed a broader dilemma in Washington’s relationship with the technology industry: the growing influence of private-sector executives in areas that have become central to national security.
Julian Gewirtz, a senior research scholar at Columbia University’s School of International and Public Affairs and a nonresident fellow at Harvard University’s Belfer Center for Science and International Affairs, argued that the most troubling aspect of the episode may be the administration’s response to warnings about Huang.
“Although the full Nvidia story is still emerging, the most alarming revelation may not be that Jensen Huang, America’s most influential AI executive, was involved with a suspected Chinese spy. It may be that senior administration officials were warned about the danger and nevertheless continued relying on him to guide the United States’ technological future,” Gewirtz wrote in The Atlantic.
He said Washington’s strategy had become unusually dependent on powerful private-sector actors whose commercial incentives could not automatically be assumed to align with national interests.
Cory Alpert, a researcher at the Lowy Institute and a PhD researcher at the University of Melbourne, similarly argued that the controversy exposed a contradiction in the government’s relationship with Silicon Valley.
“Huang’s affair shows a new contradiction at the heart of Washington’s relationship to Silicon Valley. Private executives have more power than ever, while the institutions designed to protect America’s national security haven’t adapted to that change,” Alpert wrote.
He argued that even when intelligence agencies identify potential security threats, political considerations can complicate the government’s response.
Alpert said Trump could have moved against Huang but risked alienating an influential ally who has become central to America’s technological competition with China.
Huang’s embrace of the MAGA movement has also helped Trump cultivate political and economic support in Silicon Valley, he added.
“The decision to do nothing with the information developed by the FBI was a political one, made because Trump saw Huang as indispensable,” Alpert wrote.
The emerging dispute therefore goes beyond Lutnick’s future or the allegations surrounding Huang.
It raises questions about whether Washington can effectively enforce its technology restrictions when the companies and executives it relies on to maintain its global AI advantage also have substantial commercial interests in China.
For the Trump administration, the challenge is now to demonstrate that national security considerations will take precedence over those relationships, even as the political and economic stakes of the AI race continue to rise.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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