Semiconductors initially were exempt from the tariffs President Donald Trump announced on imports from Taiwan and elsewhere, but their rarified status may be about to end. President Trump said on Tuesday that semiconductor-specific tariffs would be announced in the next week or so.
Then, last night after the financial markets closed, the President floated the idea of placing 100% tariffs on semiconductors, with exemptions for companies that are manufacturing in the US or have announced intentions to do so. Specifics weren't forthcoming, and dealmaking will undoubtedly bring that tariff percentage down. Nonetheless, 100% tariffs is certainly a higher starting point than we've seen on other tariffs imposed on countries' imports so far. The semiconductor industry initially received a reprieve from tariffs on April 11 under a Presidential Memorandum that excluded certain semiconductor products from reciprocal tariffs. But the industry knew the exemption would likely end because the Department of Commerce initiated on April 1 an investigation into the national security impact of imports of semiconductors and related products under Section 232 of the Trade and Expansion Act of 1962, a primer by Torres Trade Law explains. (Separate investigations under the same section are being conducted into critical minerals and pharmaceuticals and pharmaceutical ingredients.)
A recommendation from that investigation is required by December 27; but given the President’s recent comments in Tuesday’s CNBC interview, the report may already be done.
Tariffing semiconductors is tricky because the US imports relatively few semiconductors per se, roughly $45 billion worth. But it does import many products that include semiconductors (like smartphones). Sanford Berstein’s Stacy Rasgon speculated in a separate CNBC interview that tariffs could be placed on semiconductors contained in imported devices.
AMD, Apple, Nvidia and other semiconductor makers have their chips manufactured for them by Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan. President Trump didn’t reveal how high the semiconductor tariffs will be or whether they’ll be in addition to the existing 20% tariffs on Taiwan’s imports. His goal: to push chip manufacturing back to US shores.
