Trump threatens 100% tariffs on computer chips for companies that don't build in U.S.

Washington Post

10 hours ago

President Donald Trump said Wednesday that he would place a 100 percent tariff on all computer chips imported to the United States, but exempt companies that commit to 'building' on U.S. soil.
The proposal puts economic pressure on U.S. firms, particularly in the tech industry, which generally depend on Asia for the crucial components, setting the stage for more of the showy investment deals Trump has prompted from the industry in his second term.
Because importers often pass on the tariff costs to consumers, the chip levies could raise the price of consumer goods dependent on chips ranging from smartphones to kitchen goods to automobiles.
Apple has secured an exemption from the chip tariff, Trump said Wednesday. He announced the new semiconductor trade policy at a White House event alongside Apple CEO Tim Cook, who said his company would increase its investment in U.S. jobs and suppliers over coming years.
'We're going to be putting a very large tariff on chips and semiconductors,' Trump said. 'But the good news for companies like Apple is if you're building in the United States or have committed to build, without question, committed to build in the United States, there will be no charge.'
Apple said in its most recent annual report that 'substantially all' of its products are manufactured at least in part by other companies, 'located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam.'
In a Wednesday blog post, Apple said it would spend $600 billion on hiring workers and buying from U.S.-based suppliers during Trump's term, expanding a commitment made in February by $100 billion. Much of that spending will go toward regular business operations such as paying employees and producing TV shows for its streaming service.
Apple also touted a deal with its longtime supplier Corning, a high-tech glass maker, to eventually produce all the glass for iPhones and Apple Watches at the company's Kentucky facilities and said it was working with a group of computer chip companies to produce more of the components it uses inside the U.S.
'We're a proud American company,' Cook said at the Wednesday event, where he also said Trump had been 'a great advocate for American innovation and manufacturing' and gifted him a glass sculpture of a silicon wafer mounted on a 24-karat gold base. The president praised Cook, calling him a 'great, great man.'
Trump's chip policy is designed to give firms 'breathing room' to move manufacturing facilities and supply chains to the U.S., similar to the White House's treatment of tariffs on automakers, said a Trump administration official, who spoke on the condition of anonymity because they were not authorized to speak publicly.
The president in April revised his original plans for levies on auto imports to relieve manufacturers from the effects of 'stacked' tariffs that would apply to vehicles, component parts and source materials.
'We're fully cognizant of the fact that you can't set up a factory overnight on something as complicated as semiconductors,' the official said. 'This is designed to reflect that and build in some flexibility.'
White House spokesperson Kush Desai said the administration is taking a 'nuanced, multifaceted approach' to boosting American manufacturing.
Spokespeople for the Semiconductor Industry Association, which represents semiconductor companies and has lobbied against restrictions on imports, did not immediately return a request for comment.
Trump's tariff regime for his second term, launched in February, blindsided the tech industry which has made innovations such as smartphones into mass market products in part by creating complex supply chains that crisscross the Pacific Ocean. Tech firms joined other companies in announcing plans in line with Trump's urging for more investment in the U.S.
Companies including Amazon, chipmaker Nvidia, ChatGPT creator OpenAI, and pharma companies Roche and Eli Lilly announced multibillion-dollar spending commitments that were lauded by the White House. A string of industry CEOs met with the president over the past weeks and months.
Apple stood to lose hundreds of millions of dollars from the tariffs, Cook told investors in May. But after the CEO met with Commerce Secretary Howard Lutnick and other senior White House officials in April, Trump said he would exempt iPhones and other consumer tech products, The Washington Post previously reported.
Trump has repeatedly threatened to place tariffs on computer chips, crucial components in electronic devices of all kinds and in products such as cars and home appliances. But the components were exempted from his initial tariffs announced in February, pending an investigation by the Commerce Department to evaluate whether chips are subject to a trade law that can be used to apply tariffs to products presenting a national security risk. The administration has conducted a similar process for steel and pharmaceuticals.
Trump's pledge to exempt companies 'that build in the United States' and Apple's apparent success in securing an exemption suggests other tech bosses may seek similar treatment with their own promises to invest in the United States.
Although Trump has said his tariffs are intended to boost U.S. manufacturing, he did not make clear if only new factories would qualify for an exemption, or what scale of investment he would deem sufficient. That could give him significant leverage over corporations reliant on chips. Despite efforts by successive administrations to increase domestic chip manufacturing, Asian suppliers dominate.
The White House has celebrated the president's trade policies as creating a 'Trump effect,' incentivizing businesses to create jobs and prosperity for his supporters. But many of the investments announced by tech companies since he took office in January were in the works before his November victory, or have not yet come to fruition.
During his first week in office, Trump announced OpenAI, SoftBank, Oracle and other corporations would invest up to $500 billion in a project called Stargate to build as many as 20 data centers, warehouses stuffed with computers, to power AI projects. As of July, the only facility the companies have announced is a complex in Abilene, Texas, which began construction during the Biden administration. The Washington Post has a content partnership with OpenAI.
In his first term, Trump announced a multibillion-dollar deal for Taiwanese tech manufacturer Foxconn to build a facility in Wisconsin. It never opened.
Cook, who Trump accidentally called 'Tim Apple' at a White House event in his first term, has successfully navigated Trump's previous attempts to levy tariffs that would constrain his company's smartphone business.
Cook developed a warm relationship with Trump during his first term, unlike other Silicon Valley CEOs, in part through communicating with him directly without intermediaries, The Post previously reported. That playbook has been emulated by executives at many other businesses, who now regularly call or dine with Trump.