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Summary
Trump’s just-released National Security Strategy identifies China as an economic and military challenge. If that is so, how does selling some of the most advanced chips to China help counter the threat?
As we approach the end of 2025, there seems to be some light at the end of the tunnel on India-US relations, which started on a strong note amid the promise of Trump 2.0 but gave way to strained ties over claims of US mediating between India and Pakistan, Washington’s sudden fondness for India’s neighbour and its newly minted Field Marshall Asim Munir, and punitive levies on India for buying discounted oil from Russia.
Trump, who has given himself the title of the ‘Peace President’, has been the major disruptor in 2025 – whether in geopolitics or geo-economics -- wielding tariffs against countries for allegedly short-changing the US, and as leverage to broker peace.
If he’s been labelled unreliable or unpredictable, it’s with good reason. How else can you explain Trump’s decision to sell Nvidia’s H200 chips to China?
To be fair, Trump had given the world a warning in October that he would allow Nvidia to export chips to China after his meeting with Chinese President Xi Jinping in South Korea. The new element here is the reveal that the chips to be exported are the H200.
The US and China are neck-and-neck in the AI software race. It’s in hardware – the manufacturing of sophisticated chips – that the US has an edge over China. News reports say the H200 is Nvidia’s second-most powerful AI processor, many times more powerful than the H20 chips that Nvidia was previously permitted to sell to China. These chips are behind the advanced AI systems that increasingly drive autonomous weapons, including drone navigation systems, automatic gun emplacements, and targeting algorithms in modern warfare.
Trump’s just-released National Security Strategy identifies China as an economic and military challenge. If that is so, how does selling some of the most advanced chips to China help counter the threat?
One of the explanations is that this is part of Trump's push to expand overseas markets for US companies. According to Trump, the US will collect a 25% fee on H200 sales. AMD and Intel can expect similar approvals to sell chips to China.
David Sacks, Trump’s go-to person on AI and crypto, said the sale of advanced AI chips to China would discourage Chinese competitors such as Huawei from redoubling efforts to catch up with Nvidia. This stretches credibility quite a bit.
The fact is that there is pressure on Trump from Beijing through its imposition of export controls on rare earth minerals. These are key ingredients for manufacturing a vast array of technology in the US and abroad. This may be the reason why Trump allowed H200 exports.
PM Modi holds third call with Trump since tariff hike
Was China happy with Trump’s Nvidia move? It’s hard to say. But this week, there was (perhaps) some good news for India from Trump for a change. There was a phone conversation between PM Narendra Modi and Trump that Modi described as “warm and engaging.” The two leaders covered trade, expansion of cooperation in critical technologies, energy, defence and security, and other areas key to the implementation of the India-US COMPACT (Catalysing Opportunities for Military Partnership, Accelerated Commerce and Technology).
The call came against the backdrop of several important developments:
- A US trade team was in India for talks and it is believed India and the US could be close to a free-trade agreement.
- US trade representative Jamieson Greer told a US Senate Appropriations Committee hearing that the deal India had put on the table was its “best ever” offer, though the country was a “difficult nut to crack”.
- Tech giants Amazon and Microsoft said they would invest a combined $52.5 billion over the coming years. Amazon said it would bring in $35 billion by 2030 to advance AI-driven digitisation, export growth and job creation. Microsoft committed $17.5 billion to strengthen India’s country's AI ecosystem. In October, Google had announced a $15 billion investment in India.
- Russian President Vladimir Putin was in India on his first visit in four years on 4-5 December. Did this “warmth” in India-US relations have anything to do with Putin’s visit?
Mexico approves tariffs on Asian imports, including goods from India
While on the subject of trade, this was something of a surprise.
Mexico’s plan to levy up to 50% duties on imports of select products from Asian countries, including from India and China, will take effect from 1 January 2026. This will affect Indian auto exports mainly, but also products such as clothing, plastics, steel, household appliances, toys, textiles, furniture, footwear and leather goods.
What triggered this move? Mexico wants to reduce reliance on Asian imports, news reports said. Mexico also wants to provide greater protection for the domestic industry and increase output. Fair enough, though the real reason may lie elsewhere. Could Mexico be appeasing the US ahead of a review of the United States-Mexico-Canada trade deal?
India, looking for new markets after the Trump tariff shock, had been focussed on Latin America and Mexico in particular to boost its exports. So, this is definitely a development India could have done without, especially since Mexico is one of India’s key auto export markets.
The US has committed $1.25 billion through its Export-Import Bank to one of Pakistan’s most unstable regions, Balochistan. This follows a hard sell by Pakistan’s army chief Field Marshall Asim Munir and PM Shehbaz Sharif when they met Trump at the White House earlier in the year. At that meeting, they briefed Trump about Pakistan’s rare earth minerals potential and presented him with some samples.
Announced this week, it is the second major US investment in Pakistan in recent months In September, Missouri-based US Strategic Metals company signed a $500 million investment deal with Pakistan's Frontier Works Organization, its largest miner of critical minerals.
So the US is putting in money where the Chinese have faced security challenges. This is also the region where Pakistan accuses India of supporting a Baloch insurgency. US involvement could help stabilise the volatile region, or so goes the thinking in Pakistan, it seems.
Elizabeth Roche is Associate Professor, O.P. Jindal Global University, Sonipat Haryana
English (US) ·