Trump says US to levy 100% tariff on imported chips, but some firms exempt

Arab News

3 days ago

WASHINGTON: President Donald Trump said the US will impose a tariff of about 100 percent on imports of semiconductors but offered up a big exemption — it will not apply to companies that are manufacturing in the US or have committed to do so.
The move is part of Trump's efforts to bring manufacturing back to the US, and his remarks on Wednesday were made in tandem with an announcement that Apple would be investing an additional $100 billion in its home market.
For companies like Apple, which have committed to build in the US, 'there will be no charge,' he told reporters in the Oval Office.
He warned, however, that companies should not try to wrangle out of pledges to build US factories.
'If, for some reason, you say you're building and you don't build, then we go back and we add it up, it accumulates, and we charge you at a later date, you have to pay, and that's a guarantee,' Trump added.
The comments were, however, not a formal tariff announcement, and much remains unclear about how companies and countries around the world will be impacted.
Trump's mention of the proposed 100 percent rate for chips came in just ahead of US levies of 10 percent to 50 percent kicking in on Thursday for many goods from dozens of trading partners.
Rates on semiconductors and other key tech goods have been the subject of a US national security probe — the results of which are expected to be announced by mid-August.
Trump's Wednesday remarks produced an immediate flurry of reactions from concerned countries and business lobbies.
South Korea's top trade envoy said on Thursday that major chipmakers Samsung Electronics and SK Hynix will not be subject to 100 percent tariffs, and South Korea will have the most favorable levies on semiconductors under a trade deal between Washington and Seoul.
Samsung and SK Hynix declined to comment.
On the other end of the spectrum, the president of the Philippine semiconductor industry, Dan Lachica, said Trump's plan would be 'devastating' for his country.
In Malaysia, which is a big player in chip testing and packaging globally, trade minister Tengku Zafrul Aziz warned parliament his country 'will risk losing a major market in the United States if its products become less competitive as a result of the imposition of these tariffs.'
Survival of the biggest
Taiwan's National Development Council Minister Liu Chin-ching told reporters on Thursday that Taiwanese companies have been building US plants or buying US firms with local factories as well as collaborating with US chipmakers to counter potential chip tariffs.
Taiwanese chip contract manufacturer TSMC is expected to be relatively unscathed as it has US factories, so key customers such as Nvidia are unlikely to face increased tariff costs for US-made chips.
Nvidia, which makes cutting-edge AI graphics processing units, also plans to invest hundreds of billions of dollars in the US TSMC did not immediately reply to a request for comment, and an Nvidia spokesperson declined to comment.
'Large, cash-rich companies that can afford to build in America will be the ones to benefit the most. It's survival of the biggest,' said Brian Jacobsen, chief economist at investment advisory firm Annex Wealth Management.
Congress created a $52.7 billion semiconductor manufacturing and research subsidy program in 2022. The Commerce Department under President Joe Biden last year convinced all five leading-edge semiconductor firms to locate chip factories in the US as part of the program.
The department said the US last year produced about 12 percent of semiconductor chips globally, down from 40 percent in 1990.
'There's so much serious investment in the United States in chip production that much of the sector will be exempt,' said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics.
He added that chips made by China's SMIC or Huawei are unlikely to be exempt, but noted that chips from these companies entering the US market were mostly incorporated into devices assembled in China.
'If these tariffs were applied without a component tariff, it might not make much difference,' he said.
The EU has said it agreed to a single 15 percent tariff rate for the vast majority of EU exports, including cars, chips and pharmaceuticals. Japan has said that the US agreed not to give it a worse tariff rate than other countries on chips.
Shares in Asian chipmakers with big US investment plans climbed on Thursday, with TSMC and Samsung up 4.4 percent and 2 percent respectively. Silicon wafer producer GlobalWafers, which has a plant in Texas, jumped 10 percent.
GlobalWafers said it has proactively implemented cost reduction strategies and believes it has an opportunity to maintain competitiveness.