Bessent Reportedly Confronted Lutnick Over Nvidia Customer in Situation Room Clash

Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick in the White House Situation Room over his department's failure to blacklist an Nvidia customer accused of diverting advanced American chips to China, according to a new report.

The exchange centered on Megaspeed, a company that national security officials have pushed Commerce to place on its Entity List. The reported confrontation illustrates divisions inside President Donald Trump's administration over restricting China's access to sensitive technology while managing trade relations with Beijing.

Commerce denied that the conversation occurred. "This is false. Secretary Bessent and Secretary Lutnick had no such conversation," department spokesperson Kristen Eichamer told Axios.

According to the outlet, Bessent raised the issue during a meeting Thursday following the midterm elections, pressing Lutnick for an explanation after months of warnings from other officials.

"How come Megaspeed isn't on the entities list?" Bessent asked, according to a source briefed on the meeting. Lutnick initially struggled to respond before saying, "I don't know. I'll look into it," sources told Axios.

The reported answer drew skepticism from a source familiar with the chip dispute, who told the outlet that Lutnick had already received a memorandum outlining concerns about Megaspeed. Secretary of State Marco Rubio, who also serves as national security adviser, oversaw the intelligence memo.

The outlet reported that Lutnick received the document in May before a trip to China. White House and intelligence officials had been urging him and senior Commerce advisers to act against Megaspeed since fall 2025, according to the report.

Sources told Axios that Lutnick had spent the past year reversing efforts by administration colleagues to hold the company accountable because of concerns that restrictions would escalate the trade conflict with China.

Commerce Undersecretary Jeff Kessler also received repeated warnings about Megaspeed during meetings involving deputy official. He deferred responsibility to Lutnick, saying, "That's a decision for the secretary."

The dispute has intensified scrutiny of Commerce's handling of Nvidia-related security concerns following disclosures about Jensen Huang's relationship with Alice Huang, a Megaspeed employee whom U.S. intelligence officials suspected of working for China. The espionage allegation remains unproven. Huang resigned from his post on Thursday.

Kessler reportedly abruptly halted an investigation into Megaspeed after Nvidia intervened and Commerce had delayed blacklisting the company despite pressure from several government agencies. The department controls exports of sensitive American technologies, giving it a central role in efforts to prevent advanced chips from reaching restricted customers.

Nvidia's processors supply computing power for sophisticated artificial intelligence systems, including technologies with potential military and cyberattack applications. Allegations that those chips were diverted to China have therefore raised concerns extending beyond ordinary commercial disputes.

Adding a company to the Entity List involves an interagency process. Commerce leads a committee that includes the State, Defense and Energy departments, with Treasury consulted when appropriate.

The confrontation also follows a longstanding rivalry between Bessent and Lutnick. Both sought the Treasury secretary position during Trump's transition, and their disagreements continued over trade policy after Bessent secured the job.