Trump Says He Will Impose 100% Tariff on Imported Computer Chips but Spares Companies Investing in the US
"We'll be putting a tariff of approximately 100% on chips and semiconductors," Trump said in the Oval Office while meeting with Apple CEO Tim Cook on Wednesday. "But if you're building in the United States of America, there's no charge." The announcement comes more than three months after Trump had temporarily exempted most electronic products from his administration's harsh tariffs and on a day Apple said it will manufacture microchips in the US.
Trump Makes Things Expensive
Donald Trump X
The Republican president said that the import tax would not be applicable to companies producing computer chips within the United States. During the Covid-19 pandemic, a chip shortage led to rising car prices and played a role in driving inflation higher.
Investors appeared to view the possible tariff exemptions as a positive sign for Apple and other leading tech firms that have been heavily investing in expanding chip and component manufacturing in the U.S.
Since Trump's return to the White House in January, major tech companies have collectively pledged around $1.5 trillion in U.S. investments.
That total includes a $600 billion pledge from Apple, which increased its earlier February commitment by an additional $100 billion.
The key question now is whether the deal negotiated between Apple CEO Tim Cook and Trump will be sufficient to shield the millions of iPhones manufactured in China and India from the tariffs already enacted by the administration—and whether it will ease the pressure on Apple to hike prices on the new models set to launch next month.
Apple Rallies After Trump Announcement
Donald Trump and Apple CEO Tim Cook X
Wall Street appears optimistic. Apple's stock jumped 5% during regular trading on Wednesday and climbed another 3% in after-hours trading, following Trump's announcement that some tech firms would be exempt from the new tariffs, with Cook appearing alongside him.
Shares of AI chipmaker Nvidia, which has also recently made large-scale investments in the U.S., saw a modest uptick in after-hours trading, further contributing to the company's $1 trillion increase in market value since the beginning of Trump's second term.
Even Intel, the iconic chipmaker that has faced recent challenges, saw its stock rise in extended trading.
So far, the Semiconductor Industry Association—the leading trade group for the chip sector—has declined to comment on Trump's latest round of tariffs.
Global demand for semiconductors continues to surge, with sales up 19.6% year over year in June, according to data from the World Semiconductor Trade Statistics organization.
However, it remains unclear how many chips, or which countries of origin, will be affected by the new import tax.
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26 minutes ago
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Straits Times
26 minutes ago
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Sign up now: Get ST's newsletters delivered to your inbox US President Donald Trump with Prime Minister Narendra Modi of India during a meeting in the Oval Office in Washington, on Feb 13. NEW DELHI – US President Donald Trump's doubling of tariffs on India would deal a severe blow to the country's exporters, denting growth in the world's fourth-largest economy and putting jobs in labour-intensive sectors at risk. The first tranche of 25 per cent tariffs kicked in at midnight on Aug 7 (Eastern Standard Time). But Mr Trump on Aug 6 imposed an additional 25 per cent on India over its purchase of Russian oil, to come into effect within 21 days. 'They don't care how many people in Ukraine are being killed by the Russian war machine,' he had written on his Truth Social platform on Aug 4. Mr Trump's latest executive order marked yet another escalation in a feud with a key Asian partner, which could reverse decades of strategic courtship by his predecessors to counter China's influence in the Indo-Pacific. It would also hurt India's ambitions to more than double its exports from US$437.4 billion (S$562 billion) in 2024 to US$1 trillion by 2030. 'Given that there is a 21-day cooling period before the 50 per cent tariff kicks in, we expect some negotiation to take place to lower these rates,' Ms Sonal Badhan, an economist with Bank of Baroda, told The Straits Times. Top stories Swipe. Select. Stay informed. 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Straits Times
26 minutes ago
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Relief in Taiwan as Trump's 100% chip tariff fails to bite, but experts say it's too early to relax
Sign up now: Get ST's newsletters delivered to your inbox Taiwan Semiconductor Manufacturing Company has so far pledged a total of US$165 billion (S$212 billion) in investment to build six state-of-the-art fabs in Arizona. TAIPEI – Taipei heaved a temporary sigh of relief even as US President Donald Trump said that he would slap a shocking 100 per cent tariff on imports of semiconductors, the crucial components that form the backbone of Taiwan's economy. That is because companies that commit to making chips in the US would be exempted – according to Mr Trump – which would mean that Taiwan Semiconductor Manufacturing Company (TSMC), the crown jewel of the island's tech industry, would likely be spared. The firm, which is the world's largest contract manufacturer of chips, has so far pledged a total of US$165 billion (S$212 billion) in investment to build six state-of-the-art fabs , or semiconductor plants , in the US state of Arizona. But while things don't look too dire now, the impact of the tariff on Taiwan's chip industry could yet be far-reaching. Large clients of smaller Taiwanese chip suppliers could demand that they move some of their production to the US to sidestep the punishing duties; this could lead to a decline in Taiwan-based chip production and affect the island's position as a key part of the global tech supply chain, say analysts. And while Mr Trump's latest tariff measure is part of a push to boost domestic chip manufacturing, it could lead to higher prices of electronic devices such as smartphones, which could in turn depress demand for such devices and the chips that drive them. Such an outcome would mean uncertainty for Taiwan's semiconductor industry. Still, on Aug 7, TSMC stocks surged nearly 5 per cent to close at a record high of NT$1,180 (S$51), reflecting investor confidence in the wake of Mr Trump's announcement. Top stories Swipe. Select. Stay informed. 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Speaking to lawmakers during a parliamentary briefing on Aug 7, National Development Council chief Liu Chin-ching argued that a steep 100 per cent tariff rate would not necessarily be disastrous even for Taiwan's smaller chipmakers that do not have a US presence. 'Taiwan currently holds a leading position in the world (in chipmaking) and I believe that if the leader and competitors are all on the same starting line, the leader will continue to lead,' he said. Taiwan is a global powerhouse in chipmaking, with 60 per cent of the world's chips and almost all of the most advanced ones produced there. But experts warned that the lack of details about how the new tariff would be applied means that it is still early days yet to assess its full impact. 'The scope and mechanism of the chip tariff remain unclear. Further developments will need to be closely monitored,' said Ms Joanne Chiao, assistant research manager at Trendforce, a Taiwanese tech research firm. For starters, how much manufacturing a company would need to commit to the US to qualify for a tariff exemption is unclear. It is also unknown if Mr Trump's exemption would cover only chips produced entirely on domestic soil, or also the semiconductors that foreign companies with a US presence , such as British firm Arm, or American companies import from overseas. American chip designers such as Qualcomm typically send their designs to TSMC to be manufactured in Taiwan, before the chips are imported into the US. Moreover, more clarity is needed on whether the new tariff would apply to raw semiconductors and integrated circuits, or also chips in end devices such as smartphones and laptops. During the first quarter of 2025, only around 4 per cent of Taiwan's total exports of electronic components, including semiconductors, were shipped directly to the US. The vast majority of Taiwan-made chips were sent to other countries where they were assembled into consumer electronics. But Professor Julien Chaisse, an international trade expert at City University of Hong Kong, said that it would be 'misleading' to think this would mean that Taiwan's chip exports could be naturally immune to Mr Trump's tariff measure. 'The US government doesn't need a direct shipment to apply pressure – it can change how it interprets rules of origin,' he told The Straits Times. 'If Washington starts insisting that any product with a certain percentage of Taiwanese-made components falls under the tariff, then the effect spreads quickly,' he said. Prof Chaisse added that Mr Trump's tariff also posed a threat to Taiwan's future position in the global tech supply chain. 'Larger buyers may start demanding more Taiwanese capacity be built inside the US, just to sidestep tariffs,' he said, noting that this would, in turn, drain investment from domestic expansion in Taiwan. 'This will have consequences for how Taiwan grows its chip sector over the next five years,' he added. Ultimately, Mr Trump's push to rebuild chip manufacturing in the US will drive up costs for everyone in the supply chain. 'A high tariff on chips would inevitably raise the price of smartphones and laptops, which would also hurt demand for electronic products,' said Ms Liu Pei-chen, an analyst at Taiwan Institute of Economic Research. 'This will bring a lot of uncertainty to the chip industry,' she added. For now, however, Taiwan retains a major advantage – the US will still need to rely on the island for its semiconductor needs, particularly for advanced chips. Taiwan's intricately connected semiconductor ecosystem, which was built up over decades, is not easily replicated. The island's dominance in the sector extends to the technical prowess and efficiency among its chip engineers, which means it is not a simple matter of plonking a factory wherever one wishes. 'Even with the big investments happening in US fabs, it will take years before local production can cover demand,' said Prof Chaisse. 'In the end, this feels like pressure aimed at getting more investment from Taipei. Not because Taiwan is a threat, but because Trump wants quick wins he can point to.'
