The United States (US) has introduced a 25% tariff on select advanced semiconductors, semiconductor manufacturing equipment and derivative products, in what the White House said was the “first phase” of a plan designed to boost domestic chip production and protect national security interests.
The import duty, which came into effect on Thursday, currently targets high-performance computing chips widely used in artificial intelligence and data centre applications, including chips made by major tech firms Nvidia and AMD.
The US currently manufactures around 12% of the world’s computer chips, a steep drop from 37% in the 1990s, according to the most recent official figures.
A range of products are exempt from the new tariff, including chips and derivative devices imported for US data centres, startups, non-data centre consumer applications, non-data centre civil industrial applications and US public sector applications.
A fact sheet published by the White House notes that President Donald Trump could decide to impose broader tariffs on semiconductor imports “in the near future”. However, Ruth Benbow, Navigator Global’s ecosystem development director for North America, says the current exemptions should reassure most businesses whose products rely on these types of chips.
“The exceptions to this tariff are important as the duty seems to be targeting just the most advanced chips,” Benbow says. “It is also helpful for general users of chips that the US Secretary of Commerce has a broad remit to exempt additional items from these tariffs.”
The same day the tariff came into effect, Taiwan and the US struck a deal to bring the rate down to 15% after Taiwan committed to investing at least US$250bn into the US semiconductor industry. Other countries with major semiconductor industries, such as South Korea, are assessing the broader commercial and diplomatic impact of the levy.
The levy could put cost pressures on major chip designers and manufacturers, with some industry analysts warning about disruption to global supply chains and the end of decades of low-cost technology manufacturing and innovation. In a statement of support for the tariff, the industry association SEMI urged the US Administration to “continue engaging closely with industry to ensure any further trade actions account for commercial and operational realities, and minimise unintended impacts on global supply chains.”
At the same time, some companies involved in semiconductor tooling, materials or services could benefit from increased US investment in local chip production — a key goal of the tariff strategy. Government incentives tied to the CHIPS and Science Act of 2022, which supports the domestic production of semiconductors, are expected to drive new opportunities, though analysts note that many of these gains will accrue over the longer term rather than immediately.
Benbow says she is hopeful that most companies in the computer chip sector, including smaller firms, will not be impacted by the new tariff. Still, “SMEs that need semiconductor imports in the US should take the time to understand this decision and what exceptions are in place to ensure that they remain competitive,” she added.