Trump's Commerce Department under fire as Nvidia CEO scandal continues to rock markets

The resignation of Nvidia CEO Jensen Huang has sent shockwaves through the Trump administration. It comes after reports that officials, including the president, knew about Huang's affair with an alleged Chinese spy. The CBC's Chris Reyes is live in New York and she's been following the story closely. So Chris, the Commerce Department is under specific scrutiny here. What can you tell us? That's right. Good afternoon, Andrew. Yeah. So the first thing to know is that the U.S. Commerce Department oversees exports of these advanced AI chips and its U.S. policy, as you can imagine, to keep those chips from China because of concerns over national security and competition. One of the big questions raised with Jensen Huang's resignation is this. Was the Commerce Department doing its job? And if not, is Commerce Secretary Howard Lutnick To blame, and those concerns are now coming to the surface from inside the top ranks of the Trump administration. This morning, Treasury Secretary Scott Bessent went on CNBC and got candid about his disagreement with Lutnick over putting Megaspeed on a blacklist. So this is the company headed by Alice Wong, the alleged Chinese spy at the center of this Wong affair scandal and Bessent still quite diplomatic, but. It's quite notable, Andrew, that he would even talk so publicly about such a private conversation. Have a listen to what he said. There was coordination. Treasury, War, USTR, and State, they were in favor of putting Megaspeed on the entity list for months, but Commerce has the pin. Commerce BIS has the pin, and you will have to ask them about their internal processes. I think it should be done at this point, and if you were Secretary of Commerce, you would do things differently. I'm not going to say if I were secretary of commerce, I'm going to say as a treasury secretary, treasury and my deputy has been pushing for this for months at the deputy's level. So, Andrew, with those questions. Questions, now what happens? Well, Lutnick and Jensen Huang have been summoned to Congress, no doubt. There will be a lot of those questions when they face a committee hearing about who approved the exporting of NVIDIA chips to Megaspeed, for example, when there were so many questions over its ties with the Chinese government. Republican Tim Scott initiated this. He heads the Senate Banking Committee. And then another Republican in that committee is alleged. Alleging that Lutnick greenlit the sale of some $4 billion in advanced chips to Megaspeed. Lutnick has agreed to testify before Congress next month. Three different House committees have summoned Huang for a closed-door interview. First of December, he has until tonight, Andrew, to decide if he will do that voluntarily. And if not, he will face a subpoena. And so, Chris, with Democrats taking control of Congress in January, how could that impact developments? Yeah, that's right. Well, what's interesting, Andrew, is that in these final months with a Republican controlled Congress, you're still seeing a rush to get these guys before a committee. So you can expect that to intensify in the new year. Democrats are calling for full scale investigations over what members of the Trump administration knew about NVIDIA and its relationship with companies alleged to have such. Close ties to the Chinese government. There are calls for classified briefings, preservation of government records relating to NVIDIA, given Huang's recent high-profile ties to the Trump administration, even traveling to China on Air Force One, if you remember that. That was earlier this year, Andrew, for Trump's landmark meeting with China's Xi Jinping. And then the current Senate minority leader, Chuck Schumer, noted this on X. I want to read to you what he posted on Thursday. He said, despite Jensen Huang's resignation, Congress must demand answers from Mr. Huang and others at NVIDIA about how they may have put U.S. national security at risk. The Trump administration must also answer for what it did once it learned about Mr. Wang's relationship with a suspected Chinese intelligence. Asset. And what did Trump know when he personally invited Mr. Huang aboard Air Force One? So you can expect more of those questions from Democrats as they move into their newfound power in Congress in the new year. Chris, thank you. That is the CBC's Chris Reyes live in New York. Now, for many Canadians, NVIDIA is a key part of their investment portfolios. You may not know that, so they are no doubt concerned about the stock's value going forward. For more on that, let's bring in CBC senior business reporter Philippe de Montsigny. And that is interesting, Philippe, because, you know, pensions that you may not know about are invested in this. So it's not just some company that, you know, is this big AI company. You've been keeping an eye on the markets. What do you see? Yeah, and so even though you might not be holding Nvidia stocks specifically, a lot of index funds, mutual funds that are maybe indexed to stock market indices will have. We'll be heavily weighted with tech stocks such as NVIDIA. And so for NVIDIA, after a brief rebound this morning in early trading, we've seen the stock go back in the red. They're down about 4% right now after a drop of 4.3% yesterday. The company is on track for its longest weekly losing streak since 2012. So that's a long time. Jensen Huang's personal scandal, obviously. At the root of all of this, it's really shaking investors' confidence, but it's also happening against the backdrop of a broader tech sell-off over the past month. Investors are increasingly questioning the massive spending we're seeing in AI, including the need for more data centers. And there's also some political uncertainty following that Democratic blue-nami that we saw after the U.S. midterm elections. Now, since the latest peak in October, early October, has lost nearly $2 trillion in market value. So for anyone looking at their investments, looking at their retirement plans and wondering, yikes, should I get out of NVIDIA? It's about half, right? It's about a $4 trillion company, right? Yeah, exactly. Or should I change kind of what my plans and my decisions are right now? Have a listen to this portfolio manager. NVIDIA has secured their slots in the supply chain for the next two or three years. And so, again, that does lend us some comfort that we're not going to see the business fall apart overnight. But certainly we are watching for, like I said, who the next CEO is, other major executive departures or brain drain on the company. And so that's really where monitoring this just beyond even once the Jensen situation is kind of put to bed, what the company does is really going to be important. So what are we hearing from analysts about concerns around instability at the company and the long-term outlook? Well, one of the biggest concerns is that this fallout could extend well beyond NVIDIA. The company is at the center of the AI boom, and it's also invested heavily in other AI firms, such as Anthropic, who's set to do a big entry onto the stock market. Toronto-based Cohere, but also cloud computing company CoreWeave. And then there's... The dominance in the chip market, NVIDIA accounts for an estimated 80% market share in the chip market globally. Yesterday, some of its competitors, including AMD and Broadcom, actually gained ground on the news, but today we're seeing a reversal. AMD is down about 10.5%. Broadcom is down... Just over 5%, and that suggests investors are taking a look at the entire AI chip sector, not just NVIDIA, and reassessing how much uncertainty they're willing to take on. Philippe, thank you. That is CBC's Philippe de Montigny.