Trump says US will levy 100pct tariff on some chip imports

New Straits Times

4 hours ago

WASHINGTON: The United States will impose a tariff of about 100 per cent on semiconductor chips imported from countries not producing in America or planning to do so, President Donald Trump said.
Trump told reporters in the Oval Office on Wednesday the new tariff rate would apply to "all chips and semiconductors coming into the United States," but would not apply to companies that had made a commitment to manufacture in the United States or were in the process of doing so.
"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 not a formal tariff announcement, and Trump offered no further specifics.
It is not clear how many chips, or from which country, would be impacted by the new levy. Taiwanese chip contract manufacturer TSMC - which makes chips for most US companies - has factories in the country, so its big customers such as Nvidia are not likely to face increased tariff costs.
The AI chip giant has itself said it plans to invest hundreds of billions of dollars in US-made chips and electronics over the next four years. An Nvidia spokesperson declined to comment for this story.
"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 US$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 per cent of semiconductor chips globally, down from 40 per cent in 1990.
Any chip tariffs would likely target China, with whom Washington is still negotiating a trade deal.
"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.
Since chips made in China won't be exempt, chips made by SMIC or Huawei would not be either, Chorzempa said, noting 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.
Chipmaking nations South Korea and Japan, as well as the European Union, have reached trade deals with the US, potentially giving them an advantage.
The EU said it agreed to a single 15 per cent tariff rate for the vast majority of EU exports, including cars, chips and pharmaceuticals. South Korea and Japan said separately that US agreed not to give them worse tariff rates than other countries on chips, suggesting a 15 per cent levy as well.