(Photo by Joe Raedle/Getty Images)
President Trump plans to tariff foreign-made computer chips at 25% and increase the rate over time in an effort to push the semiconductor industry to migrate to the US.
"It’ll be 25% and higher, and it’ll go substantially higher over a course of a year," Trump said on Tuesday when a reporter asked about his plan to tariff semiconductors and foreign-made pharmaceuticals.
Trump didn’t specify an exact date for the chip-focused tariffs. Instead, he noted: “We want to give them time to come in because, as you know, when they come into the United States, and they have their plant or factory here, there is no tariff. So we want to give them a little bit of a chance.”
Still, it usually takes years and billions of dollars for a company to build a new chip factory. Taiwan’s TSMC currently manufactures leading-edge processors for Apple, AMD, Nvidia, Qualcomm, and even Intel. However, the company only just started making semiconductors at its Arizona fab—the first of three. Most of TSMC’s manufacturing is in Taiwan.
As a result, Trump’s tariffs on foreign-made chips are expected to raise the prices of a wide range of PCs, graphics cards, and smartphones. This would come on top of Trump’s recent 10% tariff on Chinese-manufactured goods, which is already leading to price increases for laptops and Nvidia's GeForce RTX 5000 graphics cards. Both products have been primarily made at contract factories based in China, although the IT supply chain has been migrating to Vietnam and India to bypass the tariffs.
Despite the risk of price increases, Trump is betting his trade policy will pay off over time and turn the US into a major manufacturing power. “I’ve been contacted by some of the biggest companies in the world, and because of what we’re doing economically, and through tariffs and taxes and incentives, they want to come back into the United States,” Trump said on Tuesday.
In the same talk, Trump also mentioned imposing a 25% tariff on foreign-made cars on April 2, so it’s possible the semiconductor tariffs will arrive on the same date.