Nvidia fallout fuels questions about Lutnick’s staying power - Semafor

Commerce Secretary Howard Lutnick has kept his job through scrutiny over his ties to sex offender Jeffrey Epstein; his cryptocurrency firm, Tether; and his former financial services firm, Cantor Fitzgerald.

The Nvidia fallout may be the toughest test yet of his staying power.

A growing GOP contingent is pointing the finger at Lutnick for not cracking down hard enough on Megaspeed, the AI chip firm with ties to an alleged Chinese spy with whom former Nvidia CEO Jensen Huang had an affair, and for what they see as the Commerce Department’s broader failure to restrict AI chip exports to China. In the wake of reporting that other administration officials had urged the Commerce secretary to move faster, Republicans on and off Capitol Hill are accusing Lutnick of defying President Donald Trump by not imposing curbs on the firm — and even positing his job could be at risk.

“We’re hearing … Trump has directed three times that [Megaspeed be blacklisted],” Rep. John Moolenaar, the top Republican on the House Select Committee on China, told Semafor. “If that’s true … then clearly, it seems that those questions need to be answered.”

But so far the balance of GOP officials are coming to Lutnick’s defense, suggesting the commerce secretary won’t be going anywhere soon.

The president himself is so far standing by Lutnick despite the bipartisan backlash, reinforcing his willingness to go easier on China as he pursues a trade detente with Beijing.

“What I would say to everybody: Just settle down,” Sen. Jim Justice, R-W.Va., told Semafor. “We don’t need to shoot Howard today.”

“There’s lots and lots and lots of stuff here that’s going to come out. Should it come out? Absolutely,” Justice continued. “Should we get on some witch hunt running through the wilderness? … I don’t do that.”

Congress will get more answers soon: Senate Majority Leader John Thune told reporters Thursday that Lutnick will testify before the chamber’s Commerce Committee. And House Foreign Affairs Chair Brian Mast, R-Fla., said that Huang, who resigned from Nvidia on Thursday following revelations of another affair with a colleague, will appear before his panel.

Even Lutnick’s critics think he’ll eventually pull himself out of trouble, even as longstanding interagency tension threatens to boil over.

“When you saw [Treasury] Secretary [Scott] Bessent blowing up at Lutnick in the Situation Room, you can rest assured the working level at Treasury was all over Commerce about chip sales for over a year,” Steve Bannon, the MAGA commentator and Bessent ally, told Semafor. “Now the issue becomes: Does Lutnick start inventing excuses to save himself?”

A Commerce Department spokesperson said that “Treasury and Commerce have a great working relationship,” adding that both “are committed to advancing President Trump’s agenda.”

The Nvidia news landed just in time for Democrats, who are finalizing their oversight plans for the next Congress. Already, lawmakers have laid the groundwork to investigate Lutnick’s involvement with Cantor Fitzgerald, Tether, and Epstein.

No GOP lawmaker has called explicitly for Lutnick’s firing. But they haven’t hesitated to blame him for many of the recent revelations about Nvidia — including the fact that Huang accompanied Trump to China earlier this year despite the since-revealed existence of a State Department memo outlining his relationship with the alleged Chinese spy.

“How on Earth do you put somebody on Air Force One [when you have] been informed there was a suspected improper relationship beforehand? How is that protecting the president?” Sen. Thom Tillis, R-N.C., said. “Shame on Lutnick for allowing that exposure to happen for the president; to me, that’s a disqualifying moment for Lutnick.”

Compared to Epstein, “this, to me, is next-level,” he added.

Sen. John Kennedy, R-La., rebuked Commerce for not shedding more light on the circumstances, particularly when it comes to the sale of AI chips to Megaspeed.

“If I were the secretary, I’d call a press conference and explain what happened,” Kennedy said. “This is as serious as an aneurysm.”

Even some of the Trump administration’s staunchest allies have weighed in, accusing Lutnick of defying the president by failing to rein in Megaspeed.

“Lutnick, it appears, used loopholes to allow some of these chip sales to occur even though President Trump has directed his administration and the Department of Commerce not to allow that to happen,” China hawk Sen. Jim Banks, R-Ind., told Fox News. He urged Lutnick to testify before the Senate Banking Committee.

Sen. Rick Scott, R-Fla., told Semafor that “you’ve got to get the facts” before drawing any conclusions, adding that Lutnick has “always responded to my questions, so that’s all I can ask.” Sen. Mike Rounds, R-S.D., also cast doubt on whether Lutnick really was at fault.

“In a lot of cases, where they simply blame someone, I want to know what the rules are that he’s trying to comply with,” Rounds told Semafor. “Is there something that we’ve done, in terms of policy, that might have either delayed his ability or something else? I don’t know, and I’d rather get the facts before I make a decision as to guilt.”

The AI industry sees little problem with Lutnick’s conduct either way.

“Commerce’s job is to expand the economy, domestic and foreign, pretty much at all costs,” National Artificial Intelligence Association CEO Caleb Max said. “So if you zoom out, I don’t think it looks nefarious; I think it looks natural.”

Far more crucially, the White House’s public posture on the debacle indicates that Trump is not particularly concerned about the fallout, let alone Lutnick’s role in it.

“Secretary Lutnick is a champion of President Trump’s America First trade and tariff policies, which have secured almost 20 fair trade deals and trillions in manufacturing investments,” a White House official said. “President Trump maintains complete confidence in the secretary and his ability to carry out the position as the most transformative Commerce Secretary in modern history.”

The White House pointed Semafor to the president’s comments earlier this week, when he told reporters that he didn’t think he’d bring up the subject during his upcoming meeting with Chinese leader Xi Jinping.

Shelby Talcott and Ashley Gold contributed reporting.