Scoop: Bessent confronts Lutnick in Situation Room over China inaction
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Treasury Secretary Scott Bessent (left) and Commerce Secretary Howard Lutnick in August 2025. Photo: Win McNamee/Getty Images
Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick over a failure to place Nvidia customer Megaspeed on a list of companies that pose national security concerns, sources familiar told Axios.
Why it matters: The Commerce Department oversees the export of sensitive U.S. technologies and Lutnick's actions — or lack thereof — are increasingly under scrutiny following revelations that Nvidia CEO Jensen Huang had an affair with Megaspeed employee and suspected Chinese spy Alice Huang.
Driving the news: At a White House Situation Room meeting on Thursday after the midterm elections, Bessent pressed Lutnick on why Megaspeed had not been added to the Commerce Department's entity list, to which Lutnick responded he would "look into it."
- Commerce Undersecretary Jeff Kessler also was repeatedly warned about Megaspeed in deputy meetings.
- But Kessler deferred to Lutnick, saying "That's a decision for the secretary."
- Sources told Axios that Lutnick has spent the last year "undoing" efforts by other administration officials to hold Megaspeed — a company accused of illegally diverting U.S. chips to China — accountable because of concerns it would escalate the trade war with China.
- Spokespeople for Treasury couldn't be immediately reached for comment.
The other side: The Commerce Department denied the Situation Room confrontation occurred.
- "This is false. Secretary Bessent and Secretary Lutnick had no such conversation," spokesperson Kristen Eichamer said.
Catch up quick: The Commerce Department is increasingly at the center of scrutiny over the broader Trump administration's handling of an intelligence memo overseen by State Department head Marco Rubio.
- Lutnick was among the officials who received the report in May, ahead of a trip to China, Axios first reported.
- On Tuesday, the New York Times reported Commerce Undersecretary Kessler abruptly stopped an investigation into Megaspeed after Nvidia intervened.
- The Financial Times reported the department was delaying efforts to blacklist Megaspeed despite several U.S. government agencies pushing it to do so.
Inside the room: White House and intelligence officials have pressed Lutnick and his top advisers to take action against Megaspeed since the fall of 2025, sources tell Axios. But they refused, so Bessent spoke up Thursday.
- "How come Megaspeed isn't on the entities list?" Bessent asked Lutnick, according to a source briefed on the meeting.
- Lutnick initially stammered, sources said, and then replied: ""I don't know. I'll look into it."
- One source, who has extensive experience concerning the chip controversy, said the reply was "bullshit" because Lutnick had resisted action ever since he was personally handed a memo, drafted by National Security Adviser and Secretary of State Marco Rubio, that outlined the problems with Megaspeed.
The big picture: Nvidia's AI chips provide the computing power needed to develop cutting-edge artificial intelligence, including systems that could transform warfare and cyberattacks.
Between the lines: The rivalry between Bessent and Lutnick dates to Trump's transition, when both sought the Treasury secretary job. After Trump chose Bessent, the two clashed over trade policy.
- Bessent's confrontation comes amid a broader slowdown in Commerce's enforcement of U.S. export restrictions, with national security officials increasingly frustrated by decisions to avoid antagonizing China.
- Blacklisting a company is an interagency decision, with Commerce leading a committee that includes State, Defense and Energy, and consults Treasury when appropriate.
- Commerce has not added a single company to its Entity List in more than a year, according to a review of the Federal Register, despite mounting pressure from national security officials.
Editor's note: This is a breaking news story and will be updated.
