Commerce Under Scrutiny: Bessent Blames Lutnick in Nvidia Chip Crisis

Treasury Secretary Scott Bessent publicly blamed Commerce Secretary Howard Lutnick on Thursday for failing to stop Nvidia AI chips from reaching China. Bessent stated that other departments supported blacklisting Megaspeed, a Singapore-based firm, for months, but Commerce held the sole authority to act. He argued the necessary tools existed and simply required implementation. The comments intensified pressure on Lutnick amid fallout from Jensen Huang’s departure as Nvidia CEO.

Bessent’s critique emerged as internal administration tensions surfaced. He told CNBC that Treasury, the USTR, and the State Department favored adding Megaspeed to the entity list. The dispute centers on whether Commerce moved quickly enough to enforce export controls. Lutnick, who oversees U.S. export control programs, faces accountability for any gaps that allowed unauthorized sales. White House sources noted Lutnick has faced marginalization recently, though he retains the president’s confidence.

Congress is demanding immediate answers from administration officials. Senator Jim Banks, an Indiana Republican, called for Lutnick to testify before the Senate Banking Committee to address bipartisan concerns. A Commerce spokesperson confirmed late Thursday that Lutnick agreed to appear. The hearing will examine decisions that may have facilitated Chinese access to advanced hardware. Lawmakers are also probing the influence Silicon Valley leaders exerted on policy.

The crisis follows Huang’s ouster, triggered by revelations of an affair with Alice Huang, a woman suspected of spying for China. Megaspeed remains under investigation for potential export violations, though the company denies wrongdoing. Alice Huang is currently in China. Representative Raja Krishnamoorthi, an Illinois Democrat, described the situation as a disaster deserving scrutiny from the intelligence community. He criticized the handling of the Nvidia imbroglio in a Bloomberg Television interview.

Axios reported that President Trump authorized crackdowns on chip diversions in May, August, and November. The outlet claimed Lutnick delayed acting on these directives. This timing coincides with a post-election environment where voters expressed frustration over the AI boom’s impact. The Bureau of Industry and Security, which regulates these exports, faces renewed oversight. Senators plan to investigate Under Secretary Jeffrey Kessler and Lutnick’s leadership decisions.

Democratic lawmakers also raised questions about Lutnick’s sons, who hold leadership roles at Cantor Fitzgerald. They alleged the pair profited from policy decisions, though Lutnick divested his stake as required. BIS staff reportedly faced restrictions on investigating Nvidia after a phone call between Nvidia General Counsel Tim Teter and Kessler. Teter inquired about Alice Huang’s detention in Singapore. BIS spokespeople denied wrongdoing, and the department did not immediately respond to comment requests.