This week US President Donald Trump approved previously banned exports Nvidia's powerful H200 artificial intelligence (AI) chips to China.
In return, the U.S. government receives 25% of sales revenue, which has develop into a trademark of this government when it takes a cut in a personal company's revenue.
The H200 is Nvidia's second strongest AI processor. It is about six times more powerful than the H20 chips that were previously available to buyers in China.
These aren't consumer gadgets that power the most recent cat meme generator or allow you to with the weekly pub quiz. They are the calculating machines behind it advanced AI systems that increasingly power autonomous weapons. These include drone navigation systems, automatic gun emplacements and targeting algorithms in modern warfare.
Think less concerning the futuristic world of the Terminator movies and more concerning the very real world AI-supported targeting systems are already getting usedalso in Ukraine and the Gaza Strip.
At the tip of a 12 months through which the US and China were locked in a bitter trade war, with Trump at times increasing tariffs on China to as much as 145%, the choice to permit these sensitive exports is surprising.
This policy shift fundamentally calls into query the best way export controls work. It also raises pressing questions for U.S. allies like Australia, caught between economic dependence on China and increasing defense alignment with the increasingly unpredictable United States.
How we came
Access to advanced semiconductor chips is critical in the worldwide race for advanced artificial intelligence. In October 2022, the Biden administration set strict export controls for semiconductors in place. These rules targeted advanced AI chips and chip-making equipment destined for China.
This was known as “small yard, high fenceThe approach was to limit a narrow range of sensitive technologies (erecting a “high fence”) while allowing broader trade with China.
The Biden administration 140 Chinese firms were placed on export blacklists. It also restricted 24 varieties of manufacturing facilities and banned US engineers from supporting advanced Chinese chip factories.
These measures had an actual impact. Between 2022 and 2024 Chinese AI firms had difficulty accessing the computing power it neededforcing them to innovate with older hardware.
RITCHIE B. TONGO/EPA
A unique strategy
Trump's approach is fundamentally different. His inauguration in July allowed Nvidia to sell H20 chips to China in exchange for 15% of sales. This was widely seen as a concession to China within the context of negotiations over U.S. access to rare earth metals.
Trump's recent move to approve the way more powerful H200 chips for export to China reflects his departure from trade rules.
Strategic security decisions are transformed into transactional “deals” where every part has a price.
AI warfare is already here
AI chips now power targeting systems, control ammunition and make split-second decisions on battlefields world wide.
Ukraine's Armed Forces are reportedly using AI-equipped drones that autonomously control the ultimate approach to targets even in heavily blocked environments Improving hitting accuracy from 30-50% to about 80%.
According to a Guardian reportIsrael's “Lavender” AI system identified 37,000 potential Hamas-linked targets, but sped up airstrikes allegedly This contributes to significant civilian casualties.
According to reports, that is the People's Liberation Army of China Use of AI for drone swarm coordination, autonomous goal detection and real-time decision making on the battlefield.
The Pentagon's Project Maven synthesizes satellite and sensor data to suggest targets that U.S. forces could subsequently destroy.
This isn't science fiction; It is today's reality on the battlefield.
A brand new way of cash laundering
Modern semiconductors are “dual-use” technologies. The same chips that train AI chatbots can control cruise missiles. The same microcontrollers that control washing machines can control attack drones.
British researchers have came upon a major variety of foreign components in Russian drones The products utilized in Ukraine come from the USA and Europe.
Some were within the truest sense of the word harvested from household appliances. According to reports, Russian procurement networks bought chips for repairing washing machines, deleting the manufacturer's name with acetone and inserted them into kamikaze drones.
These components traveled through Third countries like India and Kazakhstan before finding their solution to Russian manufacturers.
You can't ban washing machines without weakening the buyer economy. But washing machines contain microcontrollers which can be perfect for military drones. Export controls can develop into a sophisticated slugfest, with each restriction spawning latest workarounds.
Australia's dilemma
As a results of joining the AUKUS security partnership, Australia has done so has restructured its export control system to align with U.S. priorities.
But Australia is in something of a quandary. China accounts for about 30% of Australia's total goods trade. Meanwhile, the US is increasingly demanding political alignment as the worth of access to its defense technology.
What does the US easing export controls on advanced AI chips mean for Australia? Are we obligated to comply? Australia's cooperation with AUKUS was based on the partners sharing similar views on threats and in search of a unified response.
However, the US recently published its National Security Strategy identifies migration to Europe as a greater “civilizational” threat than the military threat to Russia. Apparently Australians see this very in a different way.
When security becomes a bargaining chip
Export controls work after they are consistent, predictable and clearly linked to national security. They fail after they develop into bargaining chips or revenue generators.
Trump’s H200 deal turns the “high fence” around sensitive technologies right into a price-right hub.
There are pressing questions for Australia. Do US-oriented export controls serve Australian interests? Or are we outsourcing sovereignty to a partner whose decisions are all the time arbitrary and transactional in nature?
