MW Trump's Nvidia deal opens a 'pay to play' toll road to do business in America. Investors will feel every bump.

By Charlie Garcia

The Trump administration is turning export controls into a corporate tax. Stockholders should hope companies can afford it.

If the Trump administration keeps requiring companies to share revenue with it, stock prices could start reflecting regulatory relationships more than fundamentals.

Trump is creating the most beautiful government revenue model since Pope Leo X discovered he could sell indulgences to fund St. Peter's Basilica.

Remember when government export controls were about national security? When America banned shipping things like computer chips to certain countries because they were dangerous to Americans' safety - and not because the government hadn't figured out the right price?

Those innocent days ended this week when President Donald Trump confirmed a deal that creates the most beautiful government revenue model since Pope Leo X, who happened to be a Medici, discovered he could sell indulgences to fund St. Peter's Basilica. This is what you get when you put a banker's son in the Vatican - or a real-estate developer in the White House: They find creative new revenue streams.

And what a revenue stream. Uncle Sam just discovered the business model of the century: Don't tax existing commerce; create new commerce and skim 15% off the top. Or better yet, just take 15% of the equity in strategic U.S. companies - like rare-earth minerals producer MP Materials (MP). It's the diversified-portfolio approach to authoritarian economics, except the U.S. is doing it with a straight face and calling it "strategic trade policy."

Here's the latest setup - in all its glory: Nvidia (NVDA) will sell 1.5 million of its H20 chips to China in 2025, generating upward of $20 billion. Without this deal, Nvidia would generate exactly zero, because these chips were completely banned just months ago. AMD's $(AMD)$ MI308 chips get the same treatment, with China representing about a quarter of AMD's total revenue. The U.S. government's take? A cool 15% of everything, just for changing a hard "No" to "Yes we can - for a price."

Read: Nvidia and AMD reportedly strike deals with Trump - but analysts see a 'slippery slope'

Someone in the U.S. Treasury has been playing Monopoly with real money, and they're winning.

The U.S. Treasury is already mentally spending the $3 billion (15% of that $20 billion haul) it expects from Nvidia this year. AMD likely will kick in close to $1 billion from its China revenues.

And that MP Materials equity stake? Pure genius. Why settle for revenue sharing when you can own a piece of the rare earth pie that makes all these chips possible? It's vertical integration, government-style - the kind of business model that would make financier John D. Rockefeller weep with envy.

The beautiful symmetry here should be in every M.B.A. textbook. The government owns 15% of the company mining the rare earths (MP Materials), and it takes 15% of the revenues from the chips that those materials help create (Nvidia/AMD). It's like controlling both Park Place and Boardwalk - except instead of hotels, we're building export licenses. Someone in the U.S. Treasury has been playing Monopoly with real money, and they're winning.

The timeline is even better. April 2025: The Trump administration moves to ban the H20 outright. June: Ban reversed, but no licenses issued. Then, Nvidia Chief Executive Jensen Huang meets with Trump. Soon after, the U.S. Commerce Department starts printing licenses like they're Willy Wonka's golden tickets. The art of the deal, indeed.

Of course, the free-market purists are beside themselves. "The government owns the means of production!" Well, 15% of it anyway. That's not socialism; that's just smart investing. It's "capitalism with Chinese characteristics" - except now America is adopting the Chinese characteristics.

The Trump administration has invented a tax that makes the people paying it happy.

The real genius? The Trump administration has invented a tax that makes the people paying it happy. Nvidia stands to pocket $17 billion it couldn't have made before; the Treasury expects $3 billion it never dreamed of, and China gets chips the U.S. has already neutered like a suburban veterinarian. Trump himself called these H20 chips "obsolete," designed specifically to comply with export restrictions. It's a protection racket where everyone's actually being protected from something, mainly from the stupidity of the previous policy.

How Trump's toll could impact your portfolio

It's fees all the way - and the only free market left will be the market for government permissions.

Of course, turning global trade into a protection racket might have a few tiny downsides.

Look for a permission slip "gold rush" once every federal agency discovers they're sitting on a mother lode. So the EPA, for example, sells "emission waivers" for 15%. The FDA offers "approval fast passes" at, you guessed it, 15%. The FAA wants 15% of every airline route to China. Soon, you'll need to pay a percentage just to get permission to pay the percentage. It's fees all the way - and the only free market left will be the market for government permissions.

So what does Trump's toll mean for your investments? Stock prices start reflecting companies' regulatory relationships more than business fundamentals. The stock market gets it: 85% of something beats 100% of nothing.

But here's what the market's missing: this doesn't affect only Nvidia and AMD - in this administration, every company will need these permissions.

The winners here won't be the best companies; they'll be the companies that can afford the toll.

The winners here won't be the best companies; they'll be the companies that can afford the toll. Bernstein analysts calculate that the 15% revenue hit could cut Nvidia's and AMD's gross margins by between 5 and 15 percentage points. It's regulatory capture in reverse, where the government captures a piece of every big player and accidentally kills the small ones.

Watch for the tells. Who's hiring Treasury alumni as "strategic advisers?" Which CEOs are getting face time with Trump? Case in point. Last week, Trump said Intel $(INTC)$ should fire its new CEO, Lip-Bu Tan. On Monday, the president praised Tan after a private White House meeting.

Read: Trump met with Intel CEO; says Tan will bring 'suggestions' next week

Nvidia paid. AMD paid. Intel will follow. And the White House gets its cut. Workers win. Nvidia and AMD win. The markets win. For now, the U.S. skims the take. But you can bet that one day the student will beat the teacher, keep the pot and eat our lunch. That's the price of short-term success. The check comes later - but it comes.

What else could go wrong? Copycats and retaliation, for starters - call it "monkey see; monkey tax." Here, China announces 15% "market access fees." Europe demands 15% "regulatory compliance shares." Canada wants 15% because, why not? Trump just taught the world that export controls are ATMs.

Paying the enemy to stay dangerous

If China's economy tanks, so does America's new revenue stream. The U.S. is now financially invested in the success of the country it is supposedly containing.

Here's another beautiful paradox the administration has created: This tax requires America's adversaries to succeed in order for the Treasury to get paid.

It's like funding the Pentagon with a tax on Chinese military expansion. The more dangerous China becomes, the more money we make selling them the tools to become dangerous. If China's economy tanks, so does America's new revenue stream. We're now financially invested in the success of the country we're supposedly containing. It's the most beautiful conflict of interest ever created - so elegant in its stupidity that it must be intentional.

Some national-security officials warn that these Nvidia and AMD chips could boost China's AI capabilities in ways that might indirectly support its military. But those warnings get real quiet when you're staring at billions of dollars in new revenue. Money doesn't talk; it screams so loud it drowns out the sound of strategic concerns.

The market may even think this revenue share is a one-off deal. A quirky Trump thing. But once the Treasury tastes this money, once federal agencies realize they're sitting on prohibition goldmines, once other countries start their own permission rackets, there's no going back. We haven't just crossed the Rubicon; we've installed a toll booth on it.

Charlie Garcia is founder and a managing partner of R360, a peer-to-peer organization for individuals and families with a net worth of $100 million or more. Email him at charlie@R360Global.com.

Also read: Trump extends trade truce with China. What it means for tariffs.

More: Trump tried slowing China's AI development. He may have hurt Nvidia instead.

-Charlie Garcia

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August 12, 2025 07:50 ET (11:50 GMT)

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