President Donald Trump announces substantial tariffs targeting imported chips to bolster US domestic manufacturing, amid rising geopolitical tensions and export restrictions affecting global supply chains.
On September 4, 2025, President Donald Trump announced a significant new trade measure targeting the semiconductor industry, signalling plans to impose substantial tariffs on imported chips from companies that do not manufacture semiconductors within the United States. Speaking at the White House before a dinner with leading technology executives, Trump emphasised that firms investing in domestic chip production—such as Apple, which recently pledged a $600 billion US investment over four years—would be exempt from these tariffs. While the exact tariff rates and implementation timeline remain unspecified, the White House hinted at “fairly substantial” levies aimed at encouraging onshore manufacturing.
This latest tariff threat arrives amid broader moves by the US government to tighten export controls on semiconductor technology moving to China. In recent weeks, the federal Commerce Department rescinded authorisations granted in 2022 that had allowed Samsung and South Korean firm SK Hynix to acquire American chipmaking equipment for their Chinese facilities. These companies must now apply for new licenses on a case-by-case basis, with the explicit prohibition on upgrading or expanding their Chinese manufacturing sites. Similarly, Taiwan Semiconductor Manufacturing Company (TSMC)—the world’s largest contract chipmaker—will lose its ‘Validated End User’ fast-track export status for its Nanjing plant by the end of 2025, requiring licenses for all future shipments of US technology to the facility. TSMC has stated its commitment to maintaining operations in China but is engaging with US authorities on the evolving regulatory landscape.
These export controls form part of a broader US strategy aimed at curbing China’s access to advanced semiconductor technology, critical to its ambitions in AI chip development and other high-tech sectors. Notably, Intel also lost licence-free status following its divestment of its Chinese memory chip unit earlier in the year. The clampdown reflects ongoing geopolitical tensions and attempts by Washington to maintain technological and supply chain advantages.
The proposed tariffs raise substantial questions about their scope, timing, and economic consequences. Many industry leaders, including AMD and Nvidia, currently depend heavily on TSMC’s offshore manufacturing, and while the US seeks to expand domestic chip fabrication, near-term capacity remains limited relative to foreign output. Analysts caution that steep tariffs on chip imports could drive up retail prices dramatically. An April analysis by the Consumer Technology Association estimated that levies could increase costs for laptops, tablets, monitors, and game consoles by up to a third, potentially reducing consumer purchasing power by $123 billion annually if tariffs translate into higher prices at the point of sale.
Financial markets have already reacted to rising trade tensions and export restrictions. Shares in Samsung and SK Hynix fell following the revocation of export privileges, reflecting investor concerns over the impact of US policies on their Chinese operations. While both South Korean firms have begun concentrating new production capacities domestically, the added regulatory burdens introduce uncertainty. Some analysts note these protections may ultimately benefit US-based competitors like Micron, which has announced plans for a $200 billion investment in domestic chip manufacturing.
However, Trump’s extensive use of tariffs has faced legal challenges. A federal appeals court ruled that his administration exceeded presidential authority by employing the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs without congressional approval. The ruling, affecting nearly $300 billion in tariffs, has raised doubts about the future of these levies, although a Supreme Court decision is pending. Meanwhile, specific sector tariffs, such as the 50% duties on steel and aluminium, remain in place, underscoring ongoing trade frictions.
While the administration heralds these measures as steps to bolster domestic manufacturing and protect national security, the semiconductor supply chain is unlikely to be insulated from significant disruption. Industry watchers and consumers alike await further official details on the tariff structure, exemptions, and precise timelines. The challenge will be balancing national industrial policy objectives with the practical realities of a highly globalised and interdependent technology manufacturing ecosystem. Given the scale of investment required to establish advanced fabs and the existing dependence on Asian supply networks, tariffs and export restrictions could reshape the global semiconductor landscape in complex and unpredictable ways over the coming years.
Source: Noah Wire Services
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