AI chip company Nvidia "must live with" the licensing terms on sales of its second most advanced AI chip to China, Commerce Department Secretary Howard Lutnick said at a hearing on Tuesday.

"The license terms are very detailed. They've been worked out together with the State Department, and those terms Nvidia must live with," he said. When asked if he trusted the Chinese to abide by restrictions on the use of the chips, known as the H200, Lutnick deferred to President Donald Trump.

Reuters reported last week that Nvidia has not agreed to proposed conditions for use of its chips in China, including the Know-Your-Customer requirement - which ensures China's military does not access the chips.

Permission for Nvidia to sell its prized AI chips to China came after U.S. and Chinese Presidents Trump and Xi Jinping brokered a trade truce in South Korea in October. It included a U.S. pledge to postpone by a year a rule barring shipments of American technology to thousands of Chinese firms.

When asked about the decision on Tuesday, Lutnick again deferred to Trump, noting that the "complex relationship" between the U.S. and China is in the hands of Trump and the secretary of state. "They help us and instruct us and we follow their lead."

"We all are familiar with the weaponization of critical minerals and rare earths and magnets, and so the resolution of those topics is really with the president," he added.

-David Lawder and Alexandra Alper/Reuters