Commerce Secretary Lutnick has become the face of the Trump administration’s troubled response to Chinese espionage and potential national security threats.
- The most intense scrutiny is coming from Republicans on the Hill, fellow Cabinet members and the MAGA base.
Why it matters: Regulators and policymakers on both sides of the aisle want someone’s head for an affair that may have exposed sensitive technology to the nation’s top foreign adversary.
- Two names are currently at the top of that list: former Nvidia CEO Jensen Huang — and now Lutnick.
The big picture: Over the past year, Lutnick slow-walked broader administration efforts to address suspicions that Singapore-based company Megaspeed was illegally diverting chips to China, Axios first reported.
- Administration officials had pushed to place Megaspeed on the Commerce Department’s Entity List, which would have restricted exports of U.S. tech to the company.
On Friday, Treasury Secretary Scott Bessent confirmed as much.
- “Treasury, War, USTR, and State — they were in favor of putting Megaspeed on the Entity List for months, but Commerce has the pen,” Bessent said on CNBC.
- Trump himself supported taking action on three occasions, but those efforts were delayed by Lutnick, Axios reported.
There’s a widespread belief in Trump’s broad circle of advisers that the Nvidia scandal might be too much for Lutnick to survive — but Trump is standing beside him for now.
- Behind the scenes, the White House has not expressed concern regarding efforts to have Lutnick testify before Congress.
- MAGA commentators are also tearing Lutnick apart on shows like “War Room with Steve Bannon,” while Republican senators openly take him to task.
For the record: “Secretary Lutnick plays a fundamental role in advising the President across many different industries. The reports you have issued are inaccurate and false and literally misstate the topic, creating a false impression,” the Commerce Department said in response to Axios’ inquiries.
Friction point: The brewing scandal hangs in part on a CIA warning that Jensen Huang was having an affair with Alice Huang, who ran Megaspeed and was also alleged to be a Chinese spy.
- That warning appears to have been ignored by Commerce Department officials, sources told Axios.
Last fall, CIA intelligence indicated Huang was the target of the espionage, which was reported in a “book” assembled by the Office of the Director of National Intelligence for a small circle of administration officials with top secret clearance, according to sources familiar with the matter.
- In March, Secretary of State Marco Rubio, who’s also White House national security adviser, compiled a memo about the issue to ensure that Cabinet officials with “equities” in Nvidia and AI were informed, one of those sources said.
- “The memo was made so that Lutnick and Bessent and others knew what was up,” said one source.
- “Howard was given the memo. He ignored the memo,” a second source said.
In May, as Trump traveled to China aboard Air Force One, Rubio verbally briefed the president as a “reminder,” one of the sources said.
Through it all, Trump has repeatedly been in Lutnick’s corner.
- The president has defended Lutnick time and again, whether over tariffs, immigration or the latest China tussle.
- There are no indications Trump has changed his stance since publicly defending Lutnick on Thursday.
The bottom line: While Trump continues to defend Lutnick, administration officials and congressional Republicans have clearly picked a target.
AXIOS
