Socialist Trump

It's an export tax.

It's a payoff.

It's socialism.  

Where are the Republicans shouting "Socialist!!" when you really need them?

President Trump extracted an agreement from Nvidia and Advanced Micro Devices to pay the U.S. government a 15 percent cut of sales to China of Nvidia's H20 chip and AMD's 1308 chip.

Either it is an unconstitutional tax, since only Congress can levy a tax, or it is extortion in the form of a payoff to get regulatory relief. In either case, it is a form of socialism. The U.S. government will own a piece of the revenue earned by American companies. 

During the Biden administration, the U.S. government established export restrictions on the most advanced chips made by chipmakers Nvidia and AMD in the interest of both national defense and to protect America's leadership in artificial intelligence. The companies' state-of-the-art chips power the computers in AI data centers. Both companies were allowed to export to China their second-tier chips, but not those most advanced ones. 

The export ban had a mixed effect on its policy goals. Maybe the export ban hobbled China's premier chipmaker, Huawei, which was the intent, and maybe it slowed China's effort to develop AI, which might be used by the Chinese military. Or, maybe the whole effort backfired, because it forced China to devise a workaround using the second-tier chips. China did just that, creating its DeepSeek system to power AI computations, a breakthrough that roiled the chip markets. Effective or not, the justification for the ban was not that the profit margins on the chips were big enough that the companies could afford to make a payoff to the government -- a facilitation fee. The justification was that the ban served America's security interests.

It turns out that our security interests are for sale. In exchange for lifting enforcement of the export ban, the U.S. government extracted its 15 percent cut of sales revenue. It was better business for the companies to get the regulator out of the way and grease the sales process by making the U.S. a partner. That is socialism. Granted, the U.S. doesn't own the entire "means of production," the research labs and fabrication factories. But it does now have a claim on the very best part of the value-creation process, the revenue stream from sales. 

This is another iteration of Trump using pretense to accomplish unconstitutional ends. The tool he used was regulation to stop China from leapfrogging us in development of AI. But for 15 percent of sales, he would ignore that. 

I liken it to a policeman pulling over a car carrying drugs. The government says the drugs are dangerous and illegal. But for a 15 percent cut of the sales, the policeman says "nevermind," and the driver can go on his way to sell his product. 

This arrangement between the U.S. and the chipmakers is wrong in multiple directions. Either it sabotages American security in return for a payoff; or there is really nothing wrong with selling the chips to China, in which case the government shouldn't have regulations to confound the sale; or it is a special corporate tax (and don't Republicans hate those?) instituted by the executive rather than the Congress (and that is unconstitutional); or it is creeping socialism. Or it is all of these.

These are exactly the issues and principles that Republicans claim to care about. They would be complaining to high Heaven if a Democrat were president. 

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