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By Steve Mollman
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The scandal that brought down Nvidia CEO Jensen Huang is now threatening one of President Donald Trump's most influential Cabinet members—and could reshape the future of his signature tariff policies.
Commerce Secretary Howard Lutnick, a central architect and defender of Trump's trade agenda, is facing mounting pressure over his department's handling of restrictions on advanced American artificial intelligence chips reaching China.
The pressure is coming from inside the administration.
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Treasury Secretary Scott Bessent publicly pointed to Lutnick's department Friday, saying several major government agencies had supported blacklisting a Singapore-based company at the center of the Nvidia scandal for months, but that Commerce had the final say.
"Treasury, War, USTR, and State, they were in favor of putting Megaspeed on the entity list for months," Bessent said on CNBC's Squawk Box.
"But Commerce has the pen, Commerce BIS has the pen, and you will have to ask them about their internal processes."
The remarks came a day after Reuters reported that senior White House officials were discussing whether Lutnick should be pushed out, citing two people familiar with the situation.
Lutnick's departure would also have implications far beyond the Nvidia controversy. It could shift influence over Trump's tariffs toward U.S. Trade Representative Jamieson Greer, potentially opening the door to agreements that reduce duties on imports from major American trading partners.
But it could also have the opposite effect.
"Lutnick is part of the team that developed Trump's tariff strategy and has responsibility for the implementation of the tariff policy," Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, told Newsweek Saturday.
"His departure would not necessarily weaken the current policy because his replacement might implement the policy more forcefully."
The uncertainty comes as lawmakers in both parties question aspects of Trump's trade agenda and Democrats prepare to take control of Congress following last week's midterm elections.
Newsweek has reached out to the White House and the Commerce Department for comment.
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When and Why Did Jensen Huang Resign?
Huang resigned Thursday after 33 years leading Nvidia, following revelations about extramarital relationships, including one involving a Chinese businesswoman suspected by U.S. intelligence officials of working for Beijing.
The scandal began with reports that Huang had developed a close relationship with Alice Huang, a former executive at Singapore-based Megaspeed, a major buyer of Nvidia's advanced AI chips.
U.S. intelligence officials suspected Alice Huang, who is not related to the Nvidia founder, had been recruited by China's Ministry of State Security to gather intelligence and potentially influence Nvidia's advocacy for greater Chinese access to American technology, according to The New York Times.
China has rejected the espionage allegations as unsubstantiated. Megaspeed has denied wrongdoing.
Nvidia's board said last weekend that it had no reason to believe national security or company secrets had been compromised.
Huang admitted to being unfaithful to his wife but did not publicly identify the person involved.
The controversy intensified Wednesday when the Times reported a second relationship, this time with Kimberly Powell, Nvidia's vice president of healthcare, who reported directly to him.
The reports threw Huang's future at Nvidia into doubt before the board accepted his resignation.
A third relationship, involving another Nvidia employee, was reported by Reuters on Thursday, after his resignation.
The scandal has prompted congressional scrutiny not only of Nvidia but also of the Trump administration's handling of chip exports to China.
Republican Senator Tim Scott, chairman of the Senate Banking Committee, has requested that Huang testify December 3 and Lutnick December 10 over national security concerns involving the chipmaker. A Lutnick spokesperson said the commerce secretary had agreed to testify voluntarily, according to CNBC.
Republican Senator John Kennedy of Louisiana has also demanded answers.
"Secretary Lutnick needs to answer that in front of God and country," Kennedy told Politico on Wednesday.
Asked Thursday whether Lutnick should lose his job, Kennedy told CNN: "I don't know yet."
Senators Elizabeth Warren and Chris Coons have meanwhile demanded that the administration preserve documents relating to Nvidia's exports to China and potential national security risks.
The controversy has intensified questions about why the Commerce Department has not added new companies to a key U.S. trade blacklist since October 2025, the longest gap between additions in more than a decade, according to Reuters.
Who Will Take Over Nvidia?
Nvidia has appointed longtime Chief Financial Officer Colette Kress as interim CEO while its board searches for a permanent replacement.
Trump has already endorsed former Apple CEO Tim Cook for the position, writing Thursday on Truth Social: "A Legend replaces a Legend!"
Dan Ives, a technology analyst and partner at Yorkville Ives & Co., told Newsweek that Cook was the top candidate.
The leadership upheaval has rattled investors. Nvidia shares plunged about 14 percent early Thursday before recovering much of the loss and closing down 4.3 percent. The stock fell another 2 percent Friday, bringing its two-day decline to about 6.3 percent.
Ives cut his price target for Nvidia from $300 to $225 after Huang's departure, reflecting the potential loss of what Newsweek described as the co-founder's $1.8 trillion leadership premium.
The company's influence in Washington could also suffer.
Chris Miller, a Tufts University associate professor and author of Chip War, told Newsweek that the scandal would substantially reduce Nvidia's influence over U.S. technology policy toward China.
Jensen Huang's Ties to Donald Trump
Huang had cultivated a close relationship with Trump, becoming a prominent advocate for easing restrictions on American AI chip sales to China.
He visited the White House, traveled aboard Air Force One and personally lobbied the president to allow Nvidia to expand its business in the Chinese market.
Trump supported Huang even after the allegations involving Alice Huang emerged.
"I just think he's a very honorable man," Trump told reporters Monday, adding that the Nvidia executive had assured him he did not know the woman was a suspected spy.
The controversy has also drawn attention to the Trump administration's decisions on advanced chip exports to China.
In December 2025, Trump agreed to allow Nvidia to sell advanced H200 AI chips to approved customers in China under an arrangement that would give the U.S. government a share of the export revenue.
That decision has drawn criticism from lawmakers concerned that advanced American technology could strengthen China's military and intelligence capabilities.
Democratic Senator Ron Wyden and Representative Richard Neal have launched an investigation into the arrangement, questioning whether the government's share of export sales amounts to an "unconstitutional export tax."
The history of Huang's lobbying and dealings involving China has come under renewed scrutiny since the espionage allegations became public.
Lutnick's role has also attracted attention.
The New York Times reported Thursday that Lutnick frequently communicated with Huang and that his department gave Nvidia unusual access to its policymaking process.
According to the newspaper, Lutnick resisted or delayed efforts by other administration officials to tighten restrictions on advanced chip exports to China.
The Washington Post reported Friday that a former administration official said Trump had repeatedly directed Lutnick to tighten restrictions on Nvidia's most powerful chips, but that Lutnick resisted because he feared provoking a trade war with China.
Treasury Secretary Bessent, Secretary of State Marco Rubio and Greer were among officials who favored tougher controls, the Times reported.
Bessent's public comments Friday underscored those disagreements.
The dispute centered on Megaspeed, which U.S. authorities suspect of helping China obtain restricted American technology. Reuters reported that the company had purchased more than $4.8 billion in advanced Nvidia AI chips since June 2024.
Axios and CNN reported Wednesday that Bessent confronted Lutnick during a November 5 White House Situation Room meeting over Commerce's failure to blacklist Megaspeed. A Commerce Department spokesperson denied that the confrontation occurred, according to Axios.
The controversy extends beyond Megaspeed.
Reuters reported that the administration had held off blacklisting Chinese AI startup DeepSeek, memory chipmaker CXMT and more than 100 other companies identified as potential national security risks.
The Commerce Department has disputed aspects of reporting about its handling of export controls, saying it has worked with other agencies and aggressively pursued chip-smuggling investigations.
Lutnick, a former Wall Street executive who co-chaired Trump's presidential transition team, has known the president for roughly three decades.
That longstanding relationship has made him an influential figure in the administration's economic policymaking—and a particularly consequential potential casualty of the Nvidia scandal.
Impact on Trump's Tariffs Plan
Lutnick's departure could change who holds the greatest influence over Trump's tariff strategy, even if it does not immediately change the tariffs themselves.
As commerce secretary, Lutnick has helped implement the administration's trade policies and publicly championed the president's use of tariffs to protect American industries and pressure trading partners.
Greer, by contrast, is responsible for negotiating trade agreements and could gain a stronger voice in decisions about which tariffs to maintain, reduce or remove.
"Without him and his close relationship to President Trump, US Trade Representative Jamieson Greer would have a stronger say in tariff policy," Schott told Newsweek.
"Greer is responsible for trade negotiations and could cut deals with countries to reduce or remove their exposure to US levies on particular products."
Schott pointed to negotiations with Canada as an example of where such a shift could matter.
"For example, trade talks led by Greer have been taking place with Canada and seem to have been making some progress," he said.
Canadian Prime Minister Mark Carney underscored the stakes Saturday, warning that Ottawa would not accept a trade deal with Washington that threatened its automotive industry.
"This government will not settle for a deal with the United States that is not consistent with a viable Canadian auto sector," Carney told reporters in Manila.
His warning came amid a dispute over Stellantis' plans to sell its Brampton assembly plant in Ontario after shifting planned Jeep Compass production to Illinois, leaving more than 2,000 Canadian workers laid off.
Bessent, meanwhile, told CNBC Friday that he was optimistic about reaching a trade agreement with Canada, although he offered no timetable.
Other countries could also see tariff relief.
"In my view, there is scope in the near-term for removing some tariffs on imports from our free trade agreement (FTA) partners like Canada and Mexico, and possibly South Korea," Schott said.
Such changes could offer relief to businesses and consumers affected by import duties while allowing Trump to preserve much of his broader tariff agenda.
Schott said lawmakers in both parties were pushing to reduce certain tariffs, although disagreement remained over whether to eliminate the highest duties imposed on national security grounds.
A Democratic-controlled Congress could intensify scrutiny of the administration's trade policies, but lawmakers would still face significant obstacles in forcing a reversal.
Unlike export controls on advanced technology, which are central to the Nvidia controversy, import tariffs operate under separate legal authorities. Removing Lutnick would not automatically eliminate them or transfer the president's tariff powers to Congress.
And even if lawmakers passed legislation to roll back tariffs, Trump could block it.
"Calls for a full-scale removal of tariffs would provoke a heated debate in both parties, and even if legislation was passed to roll back the levies, it would likely provoke a presidential veto that would be hard to override," Schott said.
For now, Lutnick remains in office.
A White House official told Reuters Thursday that Trump "maintains complete confidence in the secretary and his ability to carry out the position," even as other officials reportedly discussed his possible removal.
The Nvidia scandal has already ended Huang's 33-year leadership of one of the world's most valuable companies. Whether it also ends Lutnick's tenure—and changes the direction of Trump's tariff policies—remains unresolved.
Schott's assessment points to competing possibilities: greater scope for negotiated tariff reductions under Greer's influence, or a replacement commerce secretary who pursues Trump's existing policies even more forcefully.
Newsweek reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
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