Good morning and welcome to White House Watch. In today’s edition, we’ll be looking at:

• The Big Tech chip tariff carve-out

• Calls for Howard Lutnick to quit

• Germany’s “estrangement” from US

Donald Trump’s alliance with Big Tech companies powering the AI boom is continuing to grow in his second term.

Aime Williams is reporting that the US administration will allow a big carve-out from forthcoming chip tariffs to US customers of TSMC, the Taiwanese semiconductor manufacturer, in a move that will benefit groups including Amazon, Google and Microsoft.

The exemption highlights the extent to which the White House is doubling down on its bet that Silicon Valley giants — with whom Trump has had a frosty relationship in the past — are crucial to America’s economic success, and deserve special treatment even as other businesses struggle due to his sweeping levies.

Trump and his economic team have now fully embraced the notion that the AI boom will deliver growth, wealth and employment to the country, even though there are signs of an emerging public backlash due to concerns about the high energy costs of big data centres and fears that any economic benefits will fail to be widely shared.

The exemption for Big Tech from the looming chip tariffs — which comes in the wake of the US Taiwan trade deal — has also shown how difficult it has been for Trump to wean the US off imports and global supply chains. Washington is acknowledging that America’s homegrown chip sector can only be built by bringing TSMC into the fold, with a sweetheart deal for US multinationals in the sector.

An administration official briefed on the carve-out plan cautioned it was still in flux and had not been signed by the president. But it is certainly a signal of the way Trump is thinking about US trade policy in the age of AI. The only catch is that the tariff exemptions are contingent on TSMC proceeding to invest billions in the US — otherwise the carve-outs will be scrapped.

“We’re going to be monitoring what unfolds after this is unveiled like hawks to make sure that the integrity of what we’re trying to accomplish with the tariffs and the rebates isn’t undermined and that this doesn’t end up being a giveaway to TSMC,” the official said.

The latest headlines

What we’re hearing

Howard Lutnick has been one of Donald Trump’s closest allies both on Wall Street and in Washington over the past few years. But in recent days, a growing chorus of members of Congress has called for him to step down from his post as commerce secretary following the latest dump of documents from the Department of Justice related to Jeffrey Epstein.

In Trump’s second administration, several cabinet secretaries have already successfully withstood pressure to resign, from Pete Hegseth after the Signalgate furore nearly a year ago, to Kristi Noem, the homeland security secretary in the wake of the shootings by federal immigration agents in Minneapolis that killed two civilians last month, and even attorney-general Pam Bondi for her initial handling of the Epstein files.

Lutnick, who has known Trump for decades and has been unabashedly loyal to the president and pivotal in negotiations over trade and tariffs, may well survive in the job. But the pressure has been building on the commerce secretary because his connections to Epstein were deeper than he had previously acknowledged, based on the latest disclosures.

“Lutnick’s lies about his business dealings with a convicted child sex offender raise serious concerns about his judgment and ethics,” said Adam Schiff, the Democratic senator from California. “Lutnick has no business being our commerce secretary, and he should resign immediately,” he added.

On the right, Kentucky Republican Thomas Massie, a House member who has frequently clashed with Trump and led the charge for the release of the Epstein files in Congress, told CNN on Sunday that it was time for Lutnick to go.

“[Lutnick has] got a lot to answer for, but really, he should make life easier on the president, frankly, and just resign,” he said.

The White House on Monday defended Lutnick, appearing to reject calls for him to step down, saying the commerce secretary would remain focused on “delivering” for Americans.

The commerce department added that the furore over Lutnick and Epstein was “nothing more than a failing attempt by the legacy media to distract from the administration’s accomplishments including securing trillions of dollars in investment, delivering historic trade deals and fighting for the American worker”. It added: “Mr and Mrs Lutnick met Jeffrey Epstein in 2005 and had very limited interactions with him over the next 14 years.”

Lutnick had addressed his previous contacts last year in an interview with the New York Post, seeking to dismiss their significance.

“I was never in the room with him socially, for business or even philanthropy. If that guy was there, I wasn’t going, because he’s gross,” he said in 2025.

But the documents released by the justice department have contradicted Lutnick’s earlier claims. Emails showed them making social plans in New York and the Virgin Islands and, on at least one occasion, becoming joint investors in a private company. They also corresponded over neighbourhood issues.

As well as facing calls for his resignation, Lutnick may also be forced to testify before Congress over his ties to Epstein, which would expose him to a heavy dose of public scrutiny that may be unwelcome for the White House. In all of Trump’s entourage, he certainly appears to be the most imperilled by the scandal.

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