Bessent publicly blames Lutnick as Nvidia fallout grows

[0:00] Tensions are palpable among Trump administration officials as questions are swirling about who knew [0:05] what and when. And just this morning, Treasury Secretary Scott Besson accused the Commerce [0:11] Department of holding out on labeling NVIDIA customer Megaspeed as a possible national security [0:17] threat. There was coordination. Treasury, war, USTR and state, they were in favor of putting [0:27] Megaspeed on the entity list for months. But Commerce has the pin, Commerce BIS has the pin and you will [0:34] have to have to ask them about their internal processes. The suspected spy at the center of this [0:41] was a Megaspeed employee. As for what President Trump knew, the New York Times reports Trump was [0:46] first warned about Wong's relationship with the suspected Chinese spy a year ago. He was briefed [0:52] again in May while en route to China, according to a source familiar with the matter. Still, [0:56] President Trump on Monday denied knowing about the affair at the time. [1:00] When were you first told of these potential issues with Mr. Blaine? You didn't answer that question. [1:05] Well, I've been hearing about it and I've been reading a little bit about it over a period of time, [1:09] but not too long ago. When you went to China earlier this year in May, did you know about [1:16] these alleged ties with the Chinese spy then? No, I didn't hear about it then. But a lot of people [1:22] have heard about it and Jensen totally denies that. I asked him that question. Did you have any idea that [1:28] she was a spy? He said, I had no idea that she was a spy. And I really believe him. [1:32] And when asked about whether the Wong should have stepped down, here's what President Trump had to [1:38] say. The big thing is, was the woman a spy? And I don't know if that's been determined yet, [1:46] but if the woman was a spy, yes. If the woman was not a spy, perhaps it would be different. [1:51] All right. So let's go live now to CNN White House correspondent, Elena Train. What more are [1:57] you learning, Elena, about the Trump administration's knowledge of this affair? [2:02] Yeah. I mean, and I just want to note off the top, you mentioned and played some of that Scott [2:07] Bess in interview. That was pretty remarkable just to, I think he laid out kind of some of [2:12] the processes over the decision-making over whether or not to put Megaspeed on an entity list because [2:17] of some of the investigations into Alice Huang, who we know is having an affair with Jensen Huang. [2:24] Evan laying out this idea that the intelligence does not yet prove that she was a Chinese spy. [2:29] But I'm getting ahead of myself. Get to your question, Pamela, about what they knew when. [2:33] That is still something we are, of course, piecing together. But this is what we do know. [2:37] We know that the president was briefed. What he said to reporters on Monday was not exactly right. [2:42] He had been briefed previously on the intelligence that they had gathered about the relationship. [2:47] Jensen Huang was having with Alice Huang. Again, someone who was tied to Megaspeed and also [2:53] suspected of potentially being a Chinese spy or having these certain ties to China that could [2:59] potentially threaten the United States national security. I want to remind you of a key moment [3:04] was that when the president last visited China, he's actually going back to China next week, [3:09] but his last visit to China was in May. And when he was on his brief stop in Alaska before [3:15] continuing the final leg of the trip, Trump had summoned Jensen Huang to Alaska to join [3:20] him and then to fly with him to Beijing. That is when our sources tell us that the secretary [3:26] of state, Marco Rubio, had given Trump a briefing on what they had known, the intelligence that [3:31] they had gathered at the time. So that's something to keep in mind as well. [3:35] We also know, of course, that the FBI has been investigating the relationship between Jensen [3:40] Huang and Alice Huang for some time now as well. And that is something that really has raised a lot [3:45] of these questions as they relate to the commerce secretary, Howard Lutnik. Howard Lutnik, I should [3:50] say, just like President Trump, also very close to Jensen Huang. Some people have said he's perhaps [3:55] even closer and that he really empathized with a lot of the arguments Jensen Huang was making about [4:00] wanting to sell more of Nvidia's advanced chips to China. But a key question, and this is what Besson was [4:07] getting at in that interview this morning with CNBC, was if they had known that there were [4:11] intelligence concerns at all and that there was an investigation into Megaspeed and Alice [4:17] Huang's ties to the Communist Party of China, why did they not put Megaspeed, the company tied to [4:23] Alice Huang, on this entity list that would essentially consider it, you know, put into [4:27] consideration these national security threats? That is a question that we heard Besson say he [4:32] recommended, but it was up to Howard Lutnik, who had the pen. A lot more to hear from this. We know [4:38] that both Lutnik and Jensen Huang are being asked to come before Congress. [4:43] All right, Elena Train, we'll see what happens on that front. Thanks so much. And join us now [4:46] with CNN political commentator and former Trump White House Director of Strategic Communications, [4:51] Alyssa Farrah Griffin. All right, so you heard the president there denying that he had knowledge [4:56] of Jensen Huang's affair with a suspected Chinese spy. And you heard there what Elena reported, [5:03] that actually he was briefed on this, on that trip to China when Jensen Huang boarded Air Force [5:09] One in Alaska. What do you think about that? Well, there's quite a bit of finger pointing [5:14] happening and, you know, folks covering their tail in the administration right now. We obviously have [5:19] the leak to The New York Times that Secretary Rubio had previously briefed the president. You now have [5:24] Scott Besant, the Treasury Secretary, essentially saying there was a full interagency coordination [5:29] to try to add Megaspeed to this export ban, but it was the Department of Commerce that was acting [5:35] separately and did not do that. So I think there's a lot of people kind of trying to [5:39] show that they were doing the right thing. Now, I see that the affair with Jensen Huang almost is [5:46] secondary in all of this. I think Congress rightly is looking both into Jensen Huang, but into Howard [5:51] Lutnik. This is the Secretary of Commerce, somebody who has basically the full capability of government [5:57] to monitor export bans and to make decisions on what entities will be on these lists. And he has [6:03] clearly failed in not coordinating with the interagency in this whole process. So there's [6:08] just a lot of questions to be answered. And I do think we need to know more about what the president [6:14] knew and when. This new reporting that he may have been briefed ahead of his prior trip to China [6:19] is quite concerning. Yeah. And now you have the Treasury Secretary calling out Lutnik and the [6:25] Commerce Department over all of this. If you were still doing comms for the Trump White House, how [6:29] would you be handling this? No one should be saying anything until the interagency has spoken among [6:36] themselves and gotten their facts straight, because it seems like there's either an effort by some to [6:41] throw some under the bus or there's just not, they don't have their facts aligned on how this went down [6:46] and when it did. But the part that really did stand out to me was Besant saying that the Department of [6:51] War, the U.S. Trade Rep and Treasury were all aligned and it was commerce almost acting unilaterally, [6:58] because then that becomes a question of was the president bypassed or was the president briefed [7:03] on Howard Lutnik's decisions? Those are all things that we need to know in the coming days. [7:07] With Democrats preparing to be in control of Congress, just how big of an issue could this [7:13] become for the administration? I mean, it's massive. So like just stepping back for a moment, [7:20] this is this is a company valued at trillions of dollars, massive implications for the U.S. stock [7:25] market, the U.S. economy, but also national security implications. These next gen chips that we were what [7:31] were keeping us ahead of China in the AI arms race that we're effectively in. And one of the arguments for [7:37] why this administration doesn't want to do any regulation around AI is because we have to stay ahead of [7:42] China. Well, because of this, you know, because of either poor decision making, lack of coordination [7:48] and this alleged spy, we may not be as ahead of China in this arms race as we think that we are. [7:53] So there's so many questions that need to be answered. But for a president who ran on being [7:58] tough on China and staying ahead of China and kind of making that the focus of his national security [8:03] strategy, I think there's a lot of questions that need to be answered. And I think in these coming [8:07] weeks as he meets with the Chinese, he needs to show a really formidable stance against this, [8:12] because this was an espionage effort against our nation, but the global economy. And I think that [8:17] we need to convey that that is not okay. Joining us right now to talk more about all of this that [8:21] is unfolding in the demands from Congress, Democratic Congresswoman Madeline Dean of [8:25] Pennsylvania. She sits on the House Foreign Affairs Committee. This is one of the three committees [8:29] that so far is demanding that he come and answer questions and testify. Congressman, [8:33] thank you for being here. We know that the chairman have set an 8 p.m. deadline tonight of answering [8:39] if he's going to come willingly to, Jensen Wong I'm talking about, willingly to be interviewed behind [8:45] closed doors or not. Do you know if he has agreed to come testify yet? I do not know. And you'll notice [8:53] that these are still Republican-held gavels. So it's very interesting that we have the three committees [8:58] calling him forward. Certainly, I serve on Foreign Affairs. We do want him to come forward. I don't have [9:04] the answer to the demand. Yeah. No, I mean, you know, stand by to stand by. It seems that it's going [9:10] to happen one way or the other, either willingly or he'll face a subpoena, especially if the [9:14] Republicans and Democrats alike are going to be calling for it. There is a lot happening here [9:20] at once, including, and you may have heard it, but the Treasury Secretary was on CNBC just this morning [9:26] and essentially threw the Commerce Secretary under the bus, putting the blame on the Commerce [9:32] Secretary saying that it was Commerce that has been the holdup and delay in trying to put more export [9:38] controls to stop that one of these companies, Megaspeed, from gaining access to these highly [9:47] important NVIDIA chips. What do you think of what we now hear from Scott Besant and him throwing [9:55] the Commerce Secretary under the bus here? Well, you can tell that there's a deep conflict [10:02] behind the curtains there between Treasury and Commerce, and it all stems from the tentacles [10:08] of all these conflicts of interest. The Commerce Secretary seemed like he was more interested in [10:14] business than in actually leading us to protect national security, to protect our economy around AI, [10:22] around these chips. You see that the entities list, Megaspeed should have been on there. That's the black [10:29] list to restrict sales to these entities. We haven't, apparently, Commerce hasn't added to that list in a [10:36] very long time. And Mr. Lutnick, with his close relationship with Jensen Wang, was in a conflict of [10:44] interest. This is what is so insidious in this administration. This is all about relationships [10:51] and what is going on with their own portfolios. And what is secondary is our national security. [10:59] So we will get to the bottom of it. We're in a very precarious place as a result of the sale of [11:05] something like $4 billion worth of chips to Megaspeed. And was she an asset of Chinese Communist Party? [11:15] It is a very precarious place. But that happens when you have a president appointing people who are not [11:22] up to the jobs that are so important. They are not independent. They are intertwined with these [11:28] relationships. And therefore, turning a blind eye when they are warned, they're dealing, possibly [11:33] dealing with a spy. [11:34] Let's turn to Will Knight, who is a senior writer at Wired. He joins us now from Cambridge, [11:40] Massachusetts. And Will, look, there's a lot to unpack in this moment. Jensen Huang, as Kevin was [11:47] saying there and talking about, has been called to testify before Congress. And this whole scandal [11:51] is really prompting officials now to aggressively tighten controls on Nvidia's advanced chips for [11:57] national security reasons. So what impact do you think all of this is going to have on the entire [12:02] AI industry? [12:03] I mean, that's a great question. That's something that I think everybody is wondering because [12:10] Jensen played such a central role and Nvidia has played such a central role in the AI boom. Their [12:16] chips are irreplaceable, really, for building the biggest models, or they're certainly the gold [12:22] standard. So everybody has needed those. And that's put Nvidia and Jensen in such an important [12:27] position. He's also played an incredibly crucial role in really guiding the AI industry, going back [12:35] to sort of very early progress on this modern kind of AI. And so everybody's really wondering what the [12:44] fate of Nvidia will be, but also the fate of the whole AI industry without this figure who's helped [12:50] guide things. And I think there is a great deal of uncertainty and it's definitely going to be very [12:55] interesting. Well, look, let's pivot to what may be happening inside Nvidia right now. We saw President [13:03] Trump helpfully or perhaps not very helpfully suggest that Tim Cook of Apple would be a good [13:08] replacement for Jensen Huang. But that aside, do you expect the company are going to stick with this [13:16] interim CEO Colette Crest that they put forward? Or can you give us your view of what or who Nvidia [13:22] needs in this moment to maintain their momentum? Yeah, I think a lot of, I mean, I should say that [13:29] the interim CEO is very widely respected and very, very experienced within Nvidia and certainly seems [13:36] to have a lot of both financial and technical expertise and chops. But I think a lot of people [13:42] are wondering if the company needs this kind of visionary, this sort of more mercurial leader. [13:48] I have no idea if the company would take seriously the president's suggestion. But that does kind of [13:56] speak to the fact that people, I think, feel that the company needs a larger than life figure to sort of [14:04] guide it through the next period. Look, between this and what's been happening with Microsoft today, [14:12] do you think what we're witnessing here is obviously a bad, maybe just a bad week for tech industry? Or are we [14:19] starting to see some deeper cracks here on the foundation of technology across the world? [14:27] Well, look, I think that the, you know, the outage, the Microsoft outage is certainly pointed to, I [14:32] think it was just being talked about this, this kind of reliance on US big tech companies. But I would [14:40] say in the AI era, you know, you haven't really seen anything yet, because these companies are becoming [14:45] so foundational, much more foundational with their AI models, because tools like Claude and ChatGPT are [14:51] being used so widely by companies, not, you know, not just as traditionally as they were as chatbots, [14:58] but increasingly to write code and to use agents to run everything that you have, you know, startups kind [15:05] of, and even large companies really running a lot on these AI systems. And, you know, as I was spoken [15:12] about, it's really difficult, because of the lead these AI companies have and the resources they now have, [15:17] in terms of both the talent and the compute, for anybody to compete. And I think that that is something [15:23] that, you know, the rest of the world is clearly recognising. And it is a really big and important [15:28] question, I mean, for other countries and for other companies and for everybody to really reckon with. [15:36] Yeah, I mean, this is a moment where we are considering how dangerously dependent we are on this, [15:41] a small handful of tech companies. But I also wonder if there's a concern about tech keeping [15:46] up with itself. You know, I was reading today about Microsoft that, you know, its advances and its [15:51] push for advances with AI is actually kind of weakening or slowing its attention to what is happening [15:57] on the back end. And that, you know, what we've seen today might be because they're not reinforcing [16:02] their foundations, but are more focused on sort of pushing their future ambitions forward. [16:08] Yeah, I mean, I have no idea if that if that were the case, but it would certainly make sense that [16:14] companies are throwing everything, especially ones sort of chasing the leaders, are throwing everything [16:20] at trying to trying to compete in AI. And yeah, I think, you know, I think, from my perspective, [16:26] I think it's really also worth asking, you know, whether these AI tools and these AI approaches are [16:32] really the only way to go, because everybody's focused on them. We're seeing companies, you know, [16:37] poor billions and billions into building data centres that function in this way. And that means [16:43] there's less focus on other ways of doing things. So that could present its own kind of systemic risk [16:49] when it comes to really exploring new avenues and new ways of doing things in the world of AI. [16:56] Yeah. And look, as you said earlier, NVIDIA has become so synonymous with the AI boom led by [17:01] Jensen Huang. And now the future of its leadership is uncertain. Together with today's Microsoft outage, [17:08] that's affected millions. I mean, you have been covering this world for years. Do you think [17:14] we're starting to see a crisis of confidence in big tech? And is the industry still as confident and [17:21] as you know, wants us to believe in its own abilities? [17:26] Well, I think that's the big question. I wish I could really give you a confident answer. I think [17:31] there is definitely good reason to question the AI boom that we've seen, the amount of money that's [17:37] been spent. And I think this is drawing more attention to that. At the same time, I would [17:43] emphasize, as I said, you know, these tools are becoming so incredibly powerful, so incredibly [17:48] foundational. You know, we've seen things in the last year that I couldn't have imagined when I [17:52] started covering AI would happen so quickly. Things like solving, you know, these grand challenges in [17:58] mathematics, as well as a sort of misbehavior of AI systems. But they're becoming so powerful and so [18:03] capable that it's hard not to see the entire AI industry becoming more integral. Whether that [18:10] justifies the level of investment and the whole economy being built around this, I think, is the [18:16] big question. All right. Well, Will Knight, thank you very much for your analysis. We'll wait to see [18:23] where this all goes for now. Thank you.