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CNBC
3 days ago
- Business
- CNBC
Trump's 100% chip tariff threat leaves more questions than answers
After months of speculation, U.S. President Donald Trump has divulged more of his semiconductor tariff plans, but his latest threats might create more questions than answers. On Wednesday, Trump said he will impose a 100% tariff on imports of semiconductors and chips, but not for companies that are "building in the United States." As semiconductors represent an over $600 billion industry at the heart of the modern digital economy, any potential tariffs hold massive weight. However, experts say the President has yet to provide key details on the policy, which will ultimately determine their full impact and targets. "It's still too early to pin down the impact of the tariffs on the semiconductor sector," Ray Wang, research director of semiconductors, supply chain and emerging technology at The Futurum Group, told CNBC. "The final rule is likely still being drafted and the technical details are far from clear at this point." One of the biggest questions for chip players and investors will be how much manufacturing a company needs to commit to the U.S. to qualify for the tariff exemption. The U.S. has been working to onshore its semiconductor supply chain for many years now. Since 2020, the world's largest semiconductor companies such as TSMC and Samsung have committed hundreds of billions of dollars to building plants in the U.S. Speaking to CNBC's "Squawk Box Asia" on Thursday, James Sullivan, Managing Director and Head of Asia Pacific Equity Research at J.P. Morgan, said this could mean most major chip manufacturers receiving exemptions. If this is the case, the policy could have the effect of "continuing to consolidate market share amongst the largest cap players in the space," Sullivan said. Indeed, shares of Asian chip majors TSMC and Samsung, which have significant investments in the U.S., rose in Thursday morning trading following Trump's announcement. Early this year, TSMC announced it would expand its investments in the U.S. to $165 billion. Shares South Korea's Samsung and SK Hynix — which have also invested in the U.S. — were also trading up after a Korean trade envoy reportedly said on radio that the duo would be exempt from the 100% tariffs. Beyond the question of exemptions, many other aspects of the potential tariffs remain unclear. Speaking on CNBC's "Squawk Box Asia," on Thursday, Stacy Rasgon, senior U.S. semiconductor analyst at Bernstein, noted that most of the semiconductors that enter the U.S. come inside consumer goods such as smartphones, PCs and cars. For example, in 2024, the U.S. imported $46.3 billion of semiconductors — only about 1% of all U.S. imports, according to the Information Technology and Innovation Foundation. While Rasgon said tariffs on these imports may be manageable, broader tariffs would be harder to deal with. "What we don't know with [Trump's] comments on tariffs, is it just raw semiconductors? Are there going to be tariffs on end devices? Are you going to be looking at tariffs on components within end devices?," Rasgon asked. On April 1, the U.S. Department of Commerce launched a national security investigation into semiconductor imports. A day later, the sector was exempted from Trump's "reciprocal" tariffs. The vague language from the Trump administration — though not invoked in the president's latest proclamations — could theoretically be used to apply broad tariffs to an enormous segment of the electronics supply chain. It's also unclear on the extent that semiconductor materials and manufacturing equipment used to manufacture chips would fall under the tariffs. Potential tariff strategies could also be complicated by the intricate and interdependent nature of the semiconductor supply chain. Rasgon gave the example of American chip designer Qualcomm, which sends their designs to TSMC to be manufactured in Taiwan and then imported to the U.S. "Does that mean those [chip imports] would not be tariffed, because they're made at TSMC, and TSMC is building in the U.S.?... I don't know. Hopefully that's how it would be," he said. Another large buyer of semiconductors in the U.S. are cloud service providers like Amazon Web Services and Google, which are essential to power Washington's AI plans. According to a recent report from ITIF, semiconductors contribute $7 trillion in global economic activity annually by underpinning a range of downstream applications including AI and "big data." In a potential sign of American companies seeking to move their chip supply chains into the U.S., Apple CEO Tim Cook, alongside Trump at the White house Wednesday, announced that it will be supplied chips from Samsung's production plant in Texas. The company also announced an additional $100 billion in U.S. investments, raising its total investment commitments in the country to $600 billion over the next four years.
CNBC
4 days ago
- Business
- CNBC
From 'great friend' to 'tariff king': The changing shades of the U.S.-India relationship
In February, U.S. President Donald Trump and Indian Prime Minister Narendra Modi exchanged warm greetings and bear hugs, and pledged to pursue an early trade agreement. Now, six months on, that goodwill has soured. Trump labels India the "tariff king," threatens higher levies within 24 hours, and accuses it of fueling Russia's war in Ukraine through oil purchases. That shift raises questions: Will India yield to U.S. pressure, or push back and risk straining a two-decade partnership? Former Singapore diplomat Bilahari Kausikan told CNBC that India will always prioritize its national interests. "India is [a] country with a deep sense of self as an independent actor," he said, adding it will "never play deputy to any sheriff." On Wednesday, Trump vowed to "substantially" raise tariffs on Indian exports, following a 25% hike and threats of penalties over Russian oil and arms purchases. That marks a stark reversal from earlier optimism, when Modi and Trump aimed to double bilateral trade to $500 billion by 2030. Vice President JD Vance had agreed on terms for a trade deal, and Commerce Minister Piyush Goyal had anticipated "preferential" tariffs just days before the hike. But Kausikan, who was also former permanent secretary of Singapore's foreign service, said it's "absurd to think that just because New Delhi is shocked at Trump's tariffs, his insulting characterization of the Indian economy as 'dead' and his flirtation with Pakistan, India will swing to China or Russia at U.S. expense." He was referring to Trump's post on social media, which called the economies of both India and Russia "dead." India leaned toward the Soviet Union during the Cold War, but after the USSR's collapse, India deepened relations with the U.S., especially under Presidents George W. Bush and Barack Obama. "What brought India and the U.S. together was a shared concern over China," Kausikan noted. "That concern isn't going away." Today, the two nations had elevated their partnership to a "Comprehensive and Global Strategic Partnership" with cooperation in defense, technology, and clean energy. India was designated a "major defense partner" by the U.S. in 2016. However, Evan Feigenbaum, Vice President of studies the Carnegie Endowment for International Peace warned in a commentary Monday that Trump's actions could unravel more than two decades of progress. Speaking on CNBC's "Squawk Box Asia," he said although there were points of disagreement in their bilateral relationship — such as India's ties with Russia and the United States' ties with Pakistan — "they never let those third party relationships or concerns bleed back into the bilateral relationship in ways that were very debilitating." "All bets are off now," he added. India's External Affairs Ministry responded sharply to criticism over Russian oil purchases Tuesday, calling it "unjustified and unreasonable." The ministry also pointed out that Western nations criticizing India are themselves continuing to trade with Russia. Feigenbaum said India sees that as "hypocritical" and "blame shifting," saying that the West's collective failure to stop the war is now being pinned on India. He also noted growing unease from New Delhi over the United States' outreach to China. Former U.S. ambassador to the U.N. Nikki Haley urged the administration not to "burn a relationship with a strong ally like India," highlighting that China, which is Russia's top oil buyer, received a 90-day tariff pause in May. Prospects for a trade deal appear slim. Feigenbaum said Indian media, the public, and the opposition are urging the government not to show weakness. "Even if there's a deal, the trust is gone," he said. Former Indian Finance Secretary Subhash Garg echoed that sentiment: "Our positions are so different that there is very little possibility of a reconciliation." He suggested India should absorb the export hit and diversify to domestic or alternative markets. "If there is an American demand, they will buy and let [the] American consumers and the importers pay the tariff. Let them bear that." However, former Indian Labor Secretary Sumita Dawra expressed cautious optimism. She said India hopes for "positive outcomes" from trade talks later in August. She said while tariffs may have an impact on exports, India's domestic demand is "very high," and pointed at other trade agreements that the country has been making, such as the India-U.K. free trade agreement and the India-EU FTA, negotiations of which are expected to conclude later this year. "We're looking for a fair, mutually beneficial deal," Dawra said. "I'm sure our negotiators will do a great job."
CNBC
6 days ago
- Business
- CNBC
Trump's penalty threat puts India in a bind over Russian oil
India is navigating a tricky balancing act after U.S. President Donald Trump threatened a "penalty" over its continued imports of Russian oil — a trade that New Delhi appears reluctant to end anytime soon. Despite Trump telling reporters Friday that he "heard" India would halt purchases, officials in New Delhi have remained noncommittal. Foreign ministry spokesperson Randhir Jaiswal said that the country decides its energy import sources "based on the price at which oil is available in the international market and depending on the global situation at that time." "The Indians must be having some confusion" following Trump's threat — a reversal from the more tolerant approach taken under the Biden administration, Bob McNally, president of consulting firm Rapidan Energy Group, told CNBC's "Squawk Box Asia." "Now we're flipping around and saying, 'What are you doing taking all this Russian oil?'" McNally said. In March 2022 — a month after Russia launched its full-scale invasion of Ukraine — Daleep Singh, a former U.S. deputy national security adviser for international economics in the Biden administration, reportedly said that "friends don't set red lines" and "there is no prohibition at present on energy imports from Russia." "What we would not like to see is a rapid acceleration of India's imports from Russia as it relates to energy or any other exports that are currently being prohibited by us or by other aspects of the international sanctions regime," Singh said. On July 30, Trump announced that India would face a 25% tariff beginning Aug. 1, along with an unspecified "penalty" for buying Russian oil and military equipment. But analysts suggest that India, which is the third-largest energy consumer in the world, isn't blinking. Reuters reported that there are no immediate changes planned to India's long-term contracts with Russian suppliers, citing two anonymous Indian government sources that did not wish to be identified due to the sensitivity of the matter. Russia has become the leading oil supplier to India since the war in Ukraine began, increasing from just under 100,000 barrels per day before the invasion, or a 2.5% share of total imports, to more than 1.8 million barrels per day in 2023, or 39%. According to the International Energy Agency, 70% of Russian crude was exported to India in 2024. India's energy minister Hardeep Singh Puri defended New Delhi's actions in a July 10 interview with CNBC, saying that it helped stabilize global prices and was even encouraged by the U.S. "If people or countries had stopped buying at that stage, the price of oil would have gone up to 130 dollars a barrel. That was a situation in which we were advised, including by our friends in the United States, to please buy Russian oil, but within the price cap." Russian oil exports had been capped at $60 per barrel in December 2022 by the Group of Seven nations, representing the world's top economies, while the European Union had lowered the price cap to just above $47 per barrel in July. Still, pressure is mounting. Vishnu Varathan, Managing Director at Mizuho Securities, said that the U.S. threats present a "clear and present danger" to India. He said that New Delhi is likely to remain non-committal on oil purchases as it assesses the trade-offs of this "Russia option" as a bargaining chip. India will need to scour the global market for comparable oil bargains with Russian oil, Varathan, who is also the head of macro research for Asia ex-Japan, added. New Delhi could explore alternatives, including Iran — if an exemption from the U.S. can be negotiated — as well as a few other producers "either within or outside of the OPEC+ that have been pressured by the U.S," Varathan said. The OPEC+ bloc had agreed on Sunday to raise output by 547,000 barrels per day in September, as concerns mount over potential supply disruptions linked to Russia. India is going to face a tough choice, Rapidan's McNally said. "Trump is serious. He's frustrated with Putin... India is going to have a tough choice to make, but it's hard to see them continuing to import that a million and a half barrels [of] Russian crude if Donald Trump decides to really put the whole relationship on the line over it."
CNBC
6 days ago
- Business
- CNBC
US payrolls weakness could be due to lack of labor supply, not demand, says Ed Yardeni
Ed Yardeni, President of Yardeni Research tells CNBC's Squawk Box Asia that the weakness in the latest U.S. jobs report is likely due to the lack of labor supply, not demand and the September Fed rate cut is not a sure thing.
CNBC
01-08-2025
- Business
- CNBC
Daiichi Sankyo has inventory buffer, will expand production capacity in Ohio to mitigate US tariffs
Daichii Sankyo's CFO Koji Ogawa tells CNBC's Squawk Box Asia what the pharma company is doing to mitigate the effects of U.S. tariffs, including optimizing its supply chain and expanding its production facility in Ohio.
