There’s a small problem with Trump’s export deal with Nvidia and AMD: The Constitution says it’s illegal

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  • In today’s CEO Daily: Diane Brady on Nvidia and AMD’s export deal—which may be unconstitutional. 
  • The big story: Trump meets Putin tomorrow, expectations are low.
  • The markets: Flat.
  • Plus: All the news and watercooler chat from Fortune.

Good morning. The U.S. government’s unprecedented 15% revenue-sharing agreement with Nvidia and AMD on Chinese chip sales could be coming to a company near you. U.S. Treasury Secretary Scott Bessent called it a “beta test” in a Bloomberg TV interview yesterday, adding, “we could see it in other industries over time.”

This comes at a time when new tariffs are bringing in enough money to slow the growth of America’s $37 trillion national debt, according to the Committee for a Responsible Federal Budget.

If, as Bessent argues, the White House chips deal passes muster because there are no national security concerns that necessitate export controls on these particular products, another issue remains: Article 1, Section 9, of the U.S. Constitution, otherwise known as “the export clause,” states plainly that “No Tax or Duty shall be laid on Articles exported from any State.”

When efforts to impose excise taxes have gone before the Supreme Court in the past, such as the United States v. IBM or the United States v. United States Shoe Corp., the Court ruled in favor of business. In the first instance, IBM successfully fought a tax on insurance for goods bound for export. In the second, the United States Shoe Corp. was spared a fee on exports going through U.S. ports. 

In both instances, the Supreme Court cited the export clause as grounds to bar the government from collecting money on goods destined for sale abroad. But those decisions were rendered in 1996 and 1998, respectively. Today’s court could take a different stance, especially when it comes to the power of the Executive branch.

With Beijing and Washington weaponizing exports and policies around tariffs and export controls shifting on a daily basis, what’s next is unclear. I’m curious to get thoughts from business leaders on how the current policy environment is impacting their strategy for global growth. Send your thoughts to the email below and thanks for joining the conversation.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com.

This story was originally featured on Fortune.com



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