U.S. President Trump proposes a 100% tariff on imported computer chips, excluding foreign companies with significant investments within American borders
In a move aimed at reshoring the chip industry, the United States has announced plans to impose a 100% tariff on imported computer chips and semiconductors. The proposed tariff, which is intended to pressure global tech companies to shift operations to the U.S., could potentially lead to higher prices for many consumer electronics in the country.
However, companies with a demonstrable commitment to building semiconductor manufacturing infrastructure in the U.S. can qualify for exemption from this tariff. This condition signals a focus on investment in domestic production as part of a broader strategy to bring manufacturing back to the country.
President Trump confirmed that Apple, with an additional $100 billion investment in the U.S., will not be subject to the incoming tariffs. The specific requirement is that a company must have a tangible commitment to building semiconductor manufacturing facilities in the U.S. to qualify for exemption. This commitment can be in the form of a formal pledge or plan, even if the facilities are not yet operational or currently producing chips domestically.
The exemption is intended to incentivise onshoring semiconductor production to the U.S., with President Trump stating that if a company claims it is building in the U.S. but fails to do so, the tariffs will later be imposed retroactively. Key definitions, such as what qualifies as "building in the United States," remain to be clarified.
Taiwanese firms, including Foxconn and Pegatron, have posted gains in Taipei trading, while Samsung Electronics gained 2% in Seoul, supported by its substantial U.S. investments. SK hynix, a South Korean chipmaker, traded flat, suggesting more limited exposure to either risk or benefit.
Meanwhile, major chip-related firms in Japan, such as Tokyo Electron, Renesas, Disco Corporation, and Sumco, have declined amid concerns over their minimal U.S. manufacturing presence.
TSMC, the world's largest contract chipmaker, has pledged to invest up to $165 billion in the United States, which is the largest single foreign direct investment in U.S. history. Companies must verify their eligibility based on specific tariff exemption codes (HTS codes) to benefit from exemptions related to reciprocal tariffs.
It is not specified what portion of a product must be manufactured domestically or how far along a facility must be in its construction to qualify for an exemption. The exemption is distinct from broader exemptions for certain electronic components, which are part of a previous executive order but do not remove the separate 100% tariff threat unless the U.S. manufacturing commitment is met.
In conclusion, the proposed tariff on imported chips and semiconductors aims to drive reshoring of the chip industry, with exemptions available for companies that commit to building semiconductor manufacturing facilities in the U.S. The specific requirement is a demonstrable commitment to domestic production, with further details on qualifications yet to be clarified.
- The tariff on imported chips and semiconductors may impact the economy of Turkiye, as some technology companies may consider investing in Turkish semiconductor manufacturing to avoid the tariff.
- President Trump's announcement of exemptions for companies building semiconductor manufacturing infrastructure in the U.S. could potentially attract more investments in the Turkish finance sector, as companies may view Turkey as a suitable location for such investments to qualify for exemptions from the tariff.
- The exemption from the tariff for companies with a commitment to building semiconductor manufacturing facilities in the U.S. could encourage Turkish firms to reassess their business strategies, potentially leading to an increased focus on technology and investing in domestic manufacturing.
- In light of the proposed tariff on imported chips and semiconductors, Turkish companies might explore business opportunities with Turkish-owned semiconductor manufacturers in Istanbul, as such relationships could potentially lead to reduced costs and increased competitiveness within the global tech landscape.
