Secretary of Commerce Howard Lutnick is now facing public pressure from his fellow Cabinet members over his decision to not blacklist Megaspeed, the cloud computing company at the center of Nvidia ex-CEO Jensen Huang’s affair with a suspected Chinese spy.
The Treasury Department, among other federal agencies, were in favor of placing trade restrictions on Megaspeed, but the decision ultimately lay with Lutnick, Treasury Secretary Scott Bessent told CNBC on Friday.
“There was coordination. Treasury, War, USTR, and State were in favor of putting Megaspeed on the entity list for months,” he said. “But Commerce has the pen….You will have to ask them about their internal processes.”
Megaspeed is under investigation by the Justice Department over the suspected violation of U.S. export controls, which prohibit certain U.S.-made chips from being sold and shipped to China. Helmed by Alice Huang, the alleged spy, Megaspeed and its Malaysian subsidiary Speedmatric shipped at least $7.5 billion in Nvidia chips to China over two years, The Information reported.
Lutnick under pressure
Lutnick is facing intensifying scrutiny over reports he took action to protect Nvidia from the Trump administration’s export controls of U.S. AI hardware to China. The commerce secretary reportedly spent months “undoing” efforts to hold Megaspeed accountable for potential export control violations, Axios reported. Bessent confronted Lutnick in the Situation Room following the midterm elections over not placing Megaspeed on the entity list, according to the outlet.
Bessent told CNBC, “We don’t repeat conversations in the Situation Room.”
According to the New York Times, when Trump officials approached Oracle about cancelling a $7 billion deal to lease chips to Chinese tech conglomerate Tencent, Lutnick’s top deputy Jeff Kessler spoke up and said Lutnick had issues with a cancellation, as it would halt the shipment of 100,000 advanced Nvidia AI chips. Lutnick reportedly said he didn’t understand the rush to scrap the deal.
The Commerce Department and Nvidia did not immediately respond to Fortune’s request for comment.
Both Republican and Democratic lawmakers want to hold Lutnick accountable for not placing Megaspeed on the blacklist.
“The obvious question is why did he choose to sell advanced chips?” Republican Louisiana Sen. John Kennedy told Politico. “Secretary Lutnick needs to answer that in front of God and country.”
Lutnick agreed to testify alongside Huang before the Senate Banking Committee to address national security concerns on Dec. 10.
Meanwhile, senior White House officials are now weighing whether to oust the commerce secretary from his position, Reuters reported. Even before news of Huang’s affair broke, Lutnick’s decision not to add 100 companies, including China’s DeekSeek, to the entity list put him in hot water.
Lutnick’s potential conflicts of interest
Lutnick argued with senior White House officials that export regulations against China would stoke the trade war with China and he insisted on having conversations with Trump about China’s restricted access to U.S. chips, the Times reported.
The commerce secretary also had a friendly relationship and financial ties with Nvidia, bolstering concerns about favoritism toward the tech company.
“Howard is the person I talk to most in the administration—he’s on top of the technology and learning the industry quickly,” Huang said in September 2025.
Before Lutnick became commerce secretary, he was the CEO and chairman of investment bank Cantor Fitzgerald, which held about $1.2 billion in Nvidia stock prior to President Donald Trump’s second term.
The post Scott Bessent says Treasury wanted to blacklist Megaspeed ‘for months,’ blaming Howard Lutnick as Nvidia fallout widens: ‘Commerce has the pen’ appeared first on Fortune.
