WASHINGTON: The United States will impose a tariff of about 100 per cent on semiconductor chips imported into the country, President Donald Trump said on Wednesday (Aug 6).
Trump told reporters in the Oval Office that the new tariff rate would apply to “all chips and semiconductors coming into the United States”, but would not apply to companies that had made a commitment to manufacture in the United States.
“So 100 per cent tariff on all chips and semiconductors coming into the United States. But if you’ve made a commitment to build (in the US), or if you’re in the process of building (in the US), as many are, there is no tariff,” Trump said.
Demand for computer chips has been climbing worldwide, with sales increasing 19.6 per cent in the year-ended in June, according to the World Semiconductor Trade Statistics organisation.
Trump’s tariff threats mark a significant break from existing plans to revive computer chip production in the United States. He is choosing an approach that favours the proverbial stick over carrots in order to incentivise more production.
Essentially, the president is betting that higher chip costs would force most companies to open factories domestically, despite the risk that tariffs could squeeze corporate profits and push up prices for mobile phones, TVs and refrigerators.
By contrast, the bipartisan CHIPS and Science Act signed into law in 2022 by then-President Joe Biden provided more than US$50 billion to support new computer chip plants, fund research and train workers for the industry.
The mix of funding support, tax credits and other financial incentives was meant to draw in private investment, a strategy that Trump has vocally opposed.
