The chair of a powerful House committee says U.S. nonprofits taking money from China are stirring domestic opposition to data centers and should be penalized, a move that could set up a confrontation in the broader battle over artificial intelligence.

Rep. Jason Smith of Missouri, the chair of the House Ways and Means Committee, said in an interview that China is funding numerous nonprofits to turn the American public against the data centers pivotal to AI development. Smith, who has launched his own investigations, is calling on Treasury Secretary Scott Bessent to strip these entities of their tax-exempt status, arguing that the government should not effectively aid groups that “jeopardize our national and economic security.”

“We’ve tracked down Chinese money that’s come into U.S. non-for-profits that are organizing the protests against data centers because China wants to win computational dominance,” Smith said. “If they can sow discord and chaos within the American citizenry, they’ll slow down [America in] the AI race — and they win. We have to be guarded.”

Asked about Smith’s comments, a Treasury spokesperson said in a statement: “Tax-exempt status is not a shield for foreign influence. Organizations that misuse charitable structures to advance foreign interests undermine our laws, our democracy, and public trust.”

Legal action against U.S. nonprofits would represent a significant move and help the tech industry overcome domestic opposition. Legal experts also warn it could be another example of the Trump administration weaponizing the tax code for political purposes.

“People should think twice about using the tax code or the IRS to go after ideas or taxpayers you don’t like,” said Nina E. Olson, executive director of the Center for Taxpayer Rights. “It breeds distrust of the tax agency and negatively impacts compliance … and it could be used against you when you are out of power.”

Smith has previously singled out the news sites BreakThrough News and Tricontinental, as well as the activist group The People’s Forum, over the donations they have received from U.S. expatriate Neville Roy Singham, a former tech mogul living in Shanghai. Smith has threatened to send subpoenas to these groups if they refuse to turn over the internal financial records he has demanded.

BreakThrough News, Tricontinental and The People’s Forum did not immediately respond to requests for comment.

Policymakers are grappling with public unease over the giant new data centers springing up across the country. At least 14 states have proposed restrictions or bans on the facilities since the end of last year, while dozens of municipalities throughout the country have already put them into effect. Roughly 7 in 10 Americans now oppose the construction of AI data centers near them, according to Gallup.

This resistance poses a threat to the technological and economic development of artificial intelligence. Tech companies have eyed nearly $7 trillion in new physical infrastructure through 2030 to support the coming AI boom. Some lawmakers and experts fear that new governmental hurdles could stall progress and compromise the U.S. as it competes with Chinese tech firms.

Of domestic opposition to data centers, Smith said: “I absolutely believe it’s sparked by foreign actors.”

Critics have pointed to a range of other explanations for domestic resistance to data centers, including their impacts on utility prices and the environment. Surveys suggest that many Americans are not yet convinced that they will benefit from artificial intelligence, fearing for their jobs, among many other concerns.

“Americans are riproaring mad about data centers because of what they are doing to their communities, families and utility bills,” said Lindsay Owens, executive director of the Groundwork Collaborative, a left-leaning think tank. “Attributing what is quickly becoming a mass movement to nonprofits is a conspiracy theory and nothing else.”

To actually strip these nonprofits of tax-exempt status, the IRS would likely have to declare them a terrorist organization or allege they are receiving support from one, according to Olson. That would be an unthinkable move under most administrations, but the Trump administration has issued many such declarations recently. Even if those rulings are overturned by the courts, these fights can prove expensive and cumbersome for nonprofits to fight.

Smith appears to be the highest-ranking Republican thus far to directly blame China for the data center opposition, but several others have recently made similar suggestions. Interior Secretary Doug Burgum last week cited the role of “foreign-directed propaganda” in fueling data center opposition, and billionaire Kevin O’Leary of “Shark Tank” blamed the Chinese Communist Party for opposition in Utah to a 40,000-acre data center.

The Bitcoin Policy Institute also released a report last month identifying billions funneled by Swiss, British and Chinese billionaires into groups “driving the anti-data-center campaign,” which has provided the basis for many of the allegations. Wired also reported last month that U.S. law enforcement is investigating “anti-tech extremism.”

Some people who share Smith’s concerns about AI competitiveness have questioned the tactical upside of tying data center opposition to Chinese influence.

“We desperately need” the data centers to serve billions of AI users, said Ryan Fedasiuk, a fellow at the American Enterprise Institute, a right-leaning think tank, in a post on X. “Pretending AI anxiety is fake and that China is just astroturfing the biggest political risk of our time is the surest path to failure.”

Smith, however, argued that the stakes of the AI competition mean Treasury needs to act, and said the committee would be pushing to publicize the results of its findings.

“We have to be guarded,” Smith said. “We’re going to continue to make it public, because it’s madness.”