President Donald Trump has announced a 100% tariff on foreign-made semiconductors — a bid to force companies to build chips in the United States or order them from local fabs.
Trump made this announcement at the Oval Office after Apple’s Tim Cook promised an additional $100 billion in investments to avoid chip tariffs for iPhones, according to the Associated Press.
“We’ll be putting a tariff of approximately 100% on chips and semiconductors. But if you’re building in the United States of America, there’s no charge,” Trump said. When a reporter asked him how all of these announced investments would impact the American people, the president answered, “We have the biggest chip companies — the both of them — but we have the biggest in the world coming in. They’re going to Arizona and beyond. And in a short period of time, we’ll be [making] up to almost 50% of the chips, starting from nothing.”
These massive new facilities were built under the Biden administration’s CHIPS and Science Act, jumpstarting the production of some of the most advanced semiconductors in the U.S. Nevertheless, Trump’s tariff threats have forced these companies and more to expand their investments, allowing him to secure about $1.5 trillion in commitments for building and expanding the chip making supply chain within America’s borders.
If companies are forced to import chips at elevated rates, the American consumer will end up paying more, driving inflation and reducing demand. We also need to see more details about how the tariff exemptions will work. At the moment, the president says that he won’t put a tariff on companies that are buying (or building) locally-made semiconductors and importing them as well — but how many chips should a company buy and use for it to be exempted from the import tax?
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