Donald Trump introduced a sweeping set of import taxes on Wednesday that targeted nearly all U.S. trading partners — but offered a notable exemption for the high-tech industry.
The tariffs include a flat 10% fee on all incoming goods beginning April 5, followed by higher, customized rates for about 60 countries starting April 9. However, numerous items, including computer chips, copper, medicine, and lumber, will be excluded from the new import fees. Initial reports indicate the administration has said tariffs for semiconductors could come at a later date.
There is a catch with the exceptions. A senior official from the White House told a Reuters correspondent that the Trump administration is preparing separate tariffs for industries like semiconductors, drugs, and critical minerals. On the one hand, this means that these items will remain outside the scope of the current tariff framework (i.e., no 32% tariff on Taiwanese chips for now); on the other hand, it remains to be seen how high those import taxes will be.
Initially excluding semiconductors from the sweeping import taxes enables American companies to buy chips made in Taiwan without any curbs — good news for AMD, Broadcom, Nvidia, and Qualcomm, as the majority of their chips are produced in Taiwan. Also, the exemption of semiconductors applies to chips produced in Europe, Japan, and South Korea, which is again good news for automotive and consumer electronics industries in the U.S. as both use loads of chips.
The exclusion also concerns chips made in China, however, including those made by companies controlled by the state and at fabs sanctioned by the U.S. For now, China's semiconductor industry can rejoice, unlike the American semiconductor industry, which will now have to pay 20% extra for European and 24% extra for Japanese tools they import to their fabs in the U.S.
While 20% to 24% does not sound like a lot compared to the over 50% tariff set on China-originated goods, we are talking about very expensive equipment. ASML's lithography tools cost a significant amount of money: a Low-NA EUV litho machine costs around $200 million, whereas a High-NA EUV litho system is projected to cost $380 million even without extra taxes. With Trump's tariffs, these tools will cost $240 million and $456 million, respectively, disrupting all the capital expenditure plans for companies building advanced semiconductor production facilities in the U.S., including Intel, TSMC, and Samsung Foundry.
Those who use mature process technologies — such as GlobalFoundries and Texas Instruments — will also have to pay extra for their tools. Ultimately, this will make chips produced in the U.S. more expensive.
The highest adjusted rate goes to Vietnam at 46%, followed by Cambodia at 49%, Taiwan at 32%, and China at 34%, which on top of a previous 20% duty, brings China's total to 54%. Other countries affected include the European Union at 20%, Japan at 24%, South Korea at 25%, and India at 26%. The tariffs look massive and, in the case of China, even prohibitive.
While the punitive tariffs set on the majority of goods made in China were something to be expected, the massive import taxes on products from countries like India (32%), Taiwan (32%), Thailand (36%), Vietnam (46%), and other countries in the region will clearly hit the high-tech industry supply chain as large PC makers have moved their production away from China to these countries to avoid tariffs from the U.S. administration.
It seems manufacturers cannot actually avoid these tariffs, so expect products like PCs, smartphones, TVs, and other high-tech items to get more expensive in the U.S. and profitability of American companies to get lower.
However, some goods and countries (such as those already under heavy sanctions) are excluded. These exemptions include semiconductors, copper, drugs, lumber, specific minerals that the U.S. does not produce domestically, precious metals, energy resources, steel, aluminum, and vehicle-related goods already taxed under existing rules, and products covered under national security provisions.
