A Gangster Shakedown or Filling A Tax Loophole? - August 13, 2025

A Gangster Shakedown

Earlier this week, I read that Nvidia and Advanced Micro Devices (AMD) will pay a 15% commission to the US government on sales of their A.I. products into China. With this arrangement, these companies are now allowed to sell these products to Chinese customers, after a previously imposed export ban prevented them from doing so for “security reasons”. 

Recently I’ve been watching the MTV-produced show, “Tulsa King”, a Taylor Sheridan creation (Sheridan created the series “Yellowstone” and its spin-off shows, and “Landman”).  This show depicts a New York City gangster being exiled to Tulsa, Oklahoma, where he carries out gangster-type activities, including providing assurances, such as  “protection” or “insurance” to local Tulsa businesses in exchange for a percentage of their sales. When I read about the terms under which the US Administration would allow Nvidia and AMD to resume sales of A.I. products into China, my first thought was that this is a classic gangster shakedown, similar to what we’re seeing Dwight Manfreddi’s character carry out in theTulsa King. Given President Trump’s reputation from his New York real estate days, a gangster-type shakedown would be completely within the President’s character. With  President Trump operating during this term in office with complete impunity, he could easily pull-off a classic shakedown and dress it up as generating extra revenue for Americans. Manfreddi’s character in the Tulsa King pays money each month to the crime family back in New York.  Is Trump going to take a portion of these fees from Nvidia and AMD, and pay them out to Americans as a “tariff dividend”, as he has recently suggested? Anything is possible when it comes to appeasing the MAGA-base.  And, what about those "security concerns" about letting our A.I. rivals in China have access to North American technology? President Trump claims Nvidia’s H20 products are obsolete. Obsolescence doesn’t take away China’s ability to reverse engineer this technology.  Again, another example of President Trump being blinded by dollar signs.  

Why would Nvidia and AMD agree to such an arrangement? 

In the case of Nvidia, the export controls to China on their H20 chips were expected to cause a significant loss in revenue. Nvidia had warned that this could reduce its quarterly sales by $8 billion. The company also took a charge of $4.5 billion on its Q1 results for H20 chips inventory and purchase commitments, and indicated  it was unable to ship an additional $2.5 billion in H20 chips that were already produced.  This all adds up to a $15 billion loss in sales for Nvidia because of the export ban. 

In the case of AMD, they reported an $800 million write-off in their most recent fiscal quarter because of their inability to sell their MI308 products into China, because of the same export ban imposed on Nvidia.  Having said that, AMC also reported a record revenue of $7.685 billion in that same quarter.  While the revenue figure is staggering, the $800 million write-off impacted their bottom line by over 10%, making it meaningful. 

It’s been an eventful journey for these companies looking to sell A.I. products into the lucrative China market.  In 2023, the Biden Administration implemented an export ban on certain A.I. product into China, citing “security concerns”. In April of 2025 the Trump Administration further extended this export ban, effectively including Nvidia’s lucrative H20 products. Then, in a now common TACO move (TACO = “Trump Always Chickens Out”), the Trump Administration reversed its position and allowed Nvidia to sell these A.I products into China. At the same time President Trump delayed the implementation of tariffs on China by 90 days; a complete TACO move.  It seems that Nvidia CEO Jensen Huang's repeated appearances alongside President Trump have paid off, as he’s managed to re-open China as a market for Nvidia’s products.  Following this lead, it’s no wonder we keep seeing Apple CEO Tim Cook at the White House. Cook is not there because he wants to hear Trump drone on about Jeffery Epstein; he’s spending time with President Trump because he doesn’t want an iPhone to cost Apple $3,000 per unit to manufacture by having to build iPhones in the United States. If the US was the least expensive and most efficient place to make the iPhone, Apple would already be doing that.  If the iPhone costs Apple $3,000 a unit to manufacture, you can bet the retail sales price to you and I for an iPhone will be at or higher than $5,000.  

The 15% “commission” being paid by Nvidia and AMD may seem like a small price to pay to unlock billions of dollars in sales to Chinese customers, but it may not be that simple.  It's been reported that the Chinese government has advised local companies to avoid using NVIDIA's H20 products, in particular for government-related projects. It seems the Americans aren't the only ones with "security concerns". This could hamper NVIDIA's efforts to realize the full potential of its' re-established market access, even with these newly paid-for export licenses. 

The day after this deal with Nvidia and AMD was announced, serial entrepreneur and investor Mark Cuban came out with an interesting and contrarian take on the 15% fee.  He posted on X (Twitter), “President Donald Trump deserves credit for the move. That is the ULTIMATE wealth tax.  This is a 'billionaire's tax' structured as a royalty or sales tax on semiconductors, from the most valuable company in the world, sold to China," Mark Cuban believes it is a good move to have Nvidia and AMD pay the US government 15% of their China product sales.  Cuban went on to say,  "Everyone knows how I feel about POTUS, but he doesn't get everything wrong. Will this make up for the explosion of the deficits we face? Not as it stands now. Not close. But give him credit for knowing how those CEOs approach problems and opportunities, and using his leverage to generate tax revenues," Cuban further added, "POTUS is more progressive when it comes to taxation than anyone in the progressive wing of the Dems has ever been. The Dems should be celebrating just how progressive it is. The irony," Cuban said on X. Cuban also said that progressive Democrats like Representative Alexandria Ocasio-Cortez, Senator Bernie Sanders, and Senator . Elizabeth Warren should have floated the 15% requirement."They are so intent on income and wealth taxes on 'oligarchs,' they have no concept of leverage in business. Trump does," Cuban said. “He diluted every shareholder, upfront, regardless of their net worth. Lol. A progressive dream!" Cuban added.  Mark Cuban is a noted Democrat and campaigned for Kamala Harris in the recent US general election. As we can see from above he had some choice words for the Democratic Party’s leadership, while maintaining he’s not a fan of a sitting President.  

While I’m impressed by Mark Cuban’s interpretation of the 15% fee, indicating that it’s a tax on wealthy companies notorious for not paying their fair share of taxes (and, I’m referring to technology companies in general, not specifically Nvidia or AMD, as I have no knowledge of their recent tax filings) I’m not happy with how this looks like a shakedown, and that it sets a dangerous precedent.  And I ask, “is it fair and practical to expect each company to negotiate their own trade exemptions with the US government?” If this Administration were capable of formulating a well-thought policy, and getting that passed through the normal legislative process, then you'd have something business could work with.  Instead we have a gangster-like shakedown, and a free-for-all as every business will now try to negotiate their own deal. Mega corporations have the funds available to engage lobbyists and lawyers for this purpose.  How are small businesses and start-up companies supposed to tackle this roadblock?

A Gangster Shakedown