President Donald Trump has announced plans to impose a 100% tariff on semiconductor chips imported from countries that do not manufacture in the United States or have not committed to doing so, a move anticipated to intensify trade tensions and benefit U.S.-based production.
In a push to accelerate domestic chip production, President Trump informed reporters on Wednesday that all semiconductor imports not associated with U.S. manufacturing will face a new 100% tariff.
“The rule is straightforward,” Trump stated in the Oval Office. “If you don’t build in America or make a pledge to build here, your chips will be taxed—heavily.”
While Trump did not specify a start date or the countries that would be affected, the proposed tariff is widely seen as part of his broader effort to decrease reliance on China and reinforce domestic supply chains, particularly in vital sectors such as AI and defense.
Who’s Impacted – and Who Isn’t?
The consequences of the proposed tariff would vary significantly by country and company. Taiwan’s TSMC, the world’s largest chipmaker and a key supplier to companies like Nvidia, already has operations in the U.S., thereby shielding its clients from the penalties.
Nvidia, a leader in AI chip technology, has committed to investing hundreds of billions into U.S.-based production over the next four years, strategically positioning itself to avoid any new levies. The company chose not to comment on Trump’s remarks.
Conversely, Chinese chipmakers such as SMIC and Huawei would likely bear the full impact of the tariff, especially since much of their hardware is assembled in China before it reaches the U.S. market.
“Survival of the Biggest” as Pressure Mounts
Analysts suggest that large, financially strong tech companies will be better equipped to adapt to Trump’s tariff policy.
“The companies that can afford to build in America will gain the most. It’s the survival of the biggest,” said Brian Jacobsen, chief economist at Annex Wealth Management.
These comments resonate with Trump’s consistent position on revitalizing American manufacturing, particularly within critical infrastructure.
Global Reaction and Implications for Trade Deals
Trump’s tariff threat emerges amidst ongoing trade discussions with China, as Washington seeks to restrict the entry of sensitive technology linked to national security concerns.
Other key chip-producing nations, including South Korea, Japan, and the European Union, appear to have secured advantageous positions. All three regions have either existing trade agreements or mutual tariff understandings with the U.S.
The EU confirmed it had negotiated a 15% flat tariff on most exports, including chips, while South Korea and Japan stated they were promised rates no worse than other major partners—implying they would be exempt from Trump’s 100% tariff proposal.
Background: America’s Push for Chip Independence
In 2022, Congress approved $52.7 billion in subsidies for semiconductor manufacturing and research under the CHIPS Act. Since then, the U.S. has persuaded all five leading-edge chipmakers to commit to constructing factories on American soil.
The Commerce Department has noted that U.S. chip production has fallen from 40% of the global market in 1990 to just 12% in 2023—a statistic Trump frequently uses when advocating for his economic policies.
Senior economist Martin Chorzempa from the Peterson Institute said the tariff’s true effect will depend on its enforcement.
“If the tariffs are not applied to components within assembled products, it may not change much,” he explained. “However, if they include devices with Chinese chips, the shift could be significant.”
