HONG KONG — China significantly escalated its trade standoff with the United States Monday, saying that tech giant Nvidia, the most valuable company on the US stock market and a key provider of artificial-intelligence chips, had violated anti-monopoly laws.

Chinese regulators’ announcement of the results of their preliminary antitrust probe comes as US and Chinese diplomats hold their fourth round of trade talks in Madrid this week. Treasury Secretary Scott Bessent, leading the talks for the United States, said Sunday that discussions had been progressing well.

But the Trump administration had also upped the pressure leading into the talks. On Friday, the US Commerce Department placed two Chinese chipmakers on the so-called Entity List, barring GMC Semiconductor Technology Co. and Jicun Semiconductor Technology from purchasing US semiconductor technology.

Despite ongoing trade talks, China and the United States have engaged in tit-for-tat responses to one another’s trade actions as they try to extract leverage out of a tense situation. The United States, for example, has largely banned exports of key equipment for AI technology to China, while China has slow-rolled promises to provide rare-earth minerals used in a wide variety of electronics and defense equipment.

China’s latest move against Nvidia represents a much more aggressive action and a possible signal to the United States that recent Trump administration promises to open up Nvidia chips to China may not be viewed as favorably as the White House expected. Both China and the United States believe AI and the chips that power it are crucial for national security. Although China’s technology is currently behind America’s, it is catching up.

Trump said last month that he accepted a deal with Nvidia and another chipmaking company, AMD, to pay the US government 15% of their revenues from semiconductor sales to China in exchange for licenses to export certain higher-powered but still stripped-down versions of their technology there. The deal could help the Trump administration maintain America’s AI dominance while advancing its critical trade discussions with China.

Nvidia CEO Jensen Huang, with whom Trump made the deal in the Oval Office last month, has become a regular guest at the White House as he and Trump try to further their common interests. Huang is scheduled to meet with Trump during his visit to the United Kingdom this week.

It’s not clear that China will punish Nvidia. The Chinese market regulator said it would carry out a further investigation into the company. The decision to continue inquiries comes after the original investigation, launched in December.

Nvidia was found to have violated the terms of the regulator’s conditional approval of its acquisition of Israeli chip designer Mellanox Technologies, China’s State Administration for Market Regulation said in a statement, without providing further details. China approved the acquisition in 2020.

Nvidia (NVDA) stock was down 1.4% in premarket trading after the announcement.

The White House in April blocked the export of certain AI chips to China, including Nvidia’s H20 chips and AMD’s MI308 chips. The unprecedented deal with the Trump administration last month allows the companies to obtain export licenses to restart sales of those chips in China, a US official told CNN.

Nvidia released the H20 chip last year as a way to maintain access to the Chinese market — which made up 13% of the company’s sales in 2024 — in the face of US export controls imposed by the Biden administration.

Despite Trump opening up the H20 chips to China last month, it’s unclear if China will accept them. The chips raise security concerns for China, a social media account linked to Chinese state media said in the days following the White House’s announcement that it would allow their sale to China.

And China is highly likely to be gaining access to the chips on the black market, anyway. The H20 chips are widely believed to have contributed to DeepSeek, an advanced Chinese AI model that shook Silicon Valley upon its release earlier this year, raising concerns that China was further ahead on AI than previously understood. — CNN