Trump Threatens 100% Tariff on Semiconductors Not Built in the US
Semiconductors are tiny chips that power almost everything from smartphones to cars. Modern life would stop without them. Right now, most of these chips are made outside the U.S., especially in places like Taiwan and South Korea. Recently, Donald Trump sparked attention with his latest announcement. He would place a 100% tariff on all semiconductors not made in the U.S. That means any chip built outside the country would become twice as expensive when imported.
His goal? To push companies to build chips in America. He believes it will bring jobs back, protect national security, and reduce our dependence on other nations.
But this move could shake the global tech industry. Prices could rise. Supply chains might suffer. And international relations could get tense.
So, what does this bold plan mean for us, the economy, and the future of technology? Let’s discuss.
Context and Background
We’ve seen the U.S. chip industry shrink over decades. Today, America makes only about 12 % of global semiconductors, down from 40 % in 1990. Trump’s announcement marks another step in his aggressive trade strategy, part of a broader push that has already raised tariffs on steel, aluminum, copper, and cars.
Semiconductors are under a Section 232 national-security review. This review is often a precursor to tariffs, especially on critical goods like chips.
Details of the Proposed Tariff
Trump said the U.S. plans to levy a 100 % tariff on semiconductors that aren’t made or aren’t committed to being made in America. That doubles the cost of imports right at the entry. Still, companies building factories or already investing in U.S. chip production will be exempt and, he warns, they must actually follow through or face retroactive payments.
However, this isn’t yet a formal policy. Key parts remain unclear: when it starts, how exemptions will be verified, and which products are covered.
Motivation Behind the Move
This policy is a push to bring chip manufacturing back home. Trump hopes it means more jobs, stronger tech control, and less reliance on places like Taiwan and South Korea. He framed the tariffs as a reward for companies that build in the U.S. but a penalty for those that don’t.
Impact on the Semiconductor Industry
Global firms with U.S. plans like Apple, Nvidia, and TSMC may dodge the tariff. Apple pledged another $100 billion in U.S. investment, bringing its total to about $600 billion, including a Kentucky glass facility. Nvidia has also committed to massive domestic investment, and TSMC is already building fabs in Arizona.
Countries like South Korea quickly secured exemptions for giants such as Samsung and SK Hynix, calming markets. Stocks of chipmakers with U.S. exposure rose. TSMC and Samsung jumped 4.4 % and 2 %, while GlobalWafers soared 10 %.
Economic and Political Reactions
We saw immediate ripples around the globe. The Philippines warned the tariff could be “devastating” for its economy, since a large chunk of its exports is chips. Malaysia echoed concern that its products might lose U.S. competitiveness.
On Wall Street, reaction was muted. Many investors expected Trump to retreat, coining the phrase “TACO” (Trump Always Chickens Out). But stocks for U.S.-focused firms like Nvidia, AMD, and GlobalFoundries actually ticked up.
Risks and Criticism
This move could spark retaliation. Trade partners might respond with tariffs of their own. Companies that rely on global supply chains, especially smaller ones, could suffer steep cost hikes.
Some experts question the move’s legality. Recall that Trump’s broader “Liberation Day” tariffs are already facing court challenges under the IEEPA law.
Conclusion: What’s Next?
We’ll watch if Congress supports this plan and how enforcement unfolds. Will companies stick to their U.S. promises? Could this policy spark a reshaping of global chip flows or deepen trade tension? The stakes are high for jobs, tech, and international ties.
Frequently Asked Questions (FAQs)
Not yet, but Trump has said he plans to add a 100% tariff on chips made outside the U.S. It’s part of a new trade plan.
Yes, for now. Nvidia is safe because it’s investing in U.S. chip production. Companies building or planning factories in the U.S. may not face the new tariff.
Yes, it likely will. If chips cost more, the price of phones, laptops, and cars might go up too. The extra cost could affect many products.
South Korea, Taiwan, and the Philippines want to avoid tariffs. These countries make lots of chips and hope their companies will be treated fairly in U.S. trade policy.
Disclaimer:
This is for information only, not financial advice. Always do your research.