The White House has confirmed it is still working out the legal framework surrounding a revenue-sharing agreement with Nvidia and AMD related to AI chip exports to China.

Although the deal has been agreed to in principle, its legality and implementation remain unresolved.

According to a report from CNBC, officials stated, “The legality of it, the mechanics of it, is still being ironed out.”

This follows days after confirmation that the White House reached a revenue-sharing agreement with both companies in exchange for export licenses.

Unprecedented Revenue-Sharing Agreement Raises Constitutional Questions

The nature of the agreement has prompted legal scrutiny. While the President and the chipmakers have aligned on the arrangement in principle, it has no known precedent.

Critics have questioned whether such an agreement would violate the U.S. Constitution.

Legal experts have pointed to Article I, Section 9, which states: “No Tax or Duty shall be laid on Articles exported from any State.”

Known as the Export Clause, this provision has previously been reviewed by the U.S. Supreme Court.

Export Clause and Supreme Court Case Highlight Legal Concerns

In 1998, a Harbor Maintenance Tax imposed on cargo — including exports — was challenged by an exporter.

Although it was styled as a user fee of 0.125% of the cargo’s value, the Supreme Court sided with the exporter, finding it unconstitutional under the Export Clause.

This precedent is now being revisited by legal analysts as the White House navigates the current agreement with Nvidia and AMD.

Export Control Law Bars Fees for Export Licenses

The Export Controls Reform Act of 2018 is also central to the discussion. The Trump Administration used this law to regulate exports of dual-use items, such as advanced semiconductors. It includes a provision that explicitly prohibits charging for export license applications.

According to 50 U.S.C. § 4815(c), “No fee may be charged in connection with the submission, processing, or consideration of any application for a license or other authorization or other request made in connection with any regulation in effect under the authority of this subchapter.”

This statutory language presents another potential legal barrier for the revenue-sharing agreement as currently proposed.

PHOTO: EXNESS PIC

This article was created with AI assistance.