Trump Administration to Announce Tariffs on Semiconductors and Chips

The semiconductor industry is facing another major development as President Donald Trump announced plans to impose tariffs on semiconductors and chips. The announcement comes as the industry awaits the administration’s decision on AI chip export restrictions.

Semiconductor Industry Background

The U.S. produced only about 10% of global chips, despite more than half of global semiconductor companies being headquartered in the U.S. The U.S. CHIPs and Science Act, signed in 2022, provided $52 billion in subsidies to boost domestic chip manufacturing.

Progress has been made toward boosting domestic chip manufacturing, with companies like Intel and Taiwan Semiconductor Manufacturing Company (TSMC) receiving funding from the CHIPs Act. TSMC has committed to spending at least $100 billion over the next four years on chip manufacturing plants in the U.S.

Challenges and Uncertainties

Setting up chip manufacturing plants takes time, and Intel recently announced it was delaying construction on its Ohio chip manufacturing facility. The tariff announcement comes as the industry awaits the administration’s decision on AI chip export restrictions, which control which countries can purchase advanced semiconductors used in AI systems.

The Trump administration formally rescinded the Biden administration’s chip AI export rules in May and released its AI Action Plan in July, emphasizing the need for the U.S. to implement chip export restrictions. However, the details of what that could look like remain unclear.