Trump to Announce Chip Tariffs Amidst AI Export Rule Debate

President Donald Trump announced Tuesday that his administration plans to impose tariffs on semiconductors and chips as soon as next week. Speaking on CNBC’s Squawk Box, the President did not provide specific details regarding the scope or nature of these tariffs, but such measures could significantly disrupt U.S. hardware and artificial intelligence companies.

This announcement comes as the U.S. continues efforts to bolster its domestic chip manufacturing capabilities. In 2022, the U.S. CHIPS and Science Act allocated $52 billion in subsidies to accelerate this goal. At the time, the U.S. produced only about 10% of the world’s chips, despite being home to over half of global semiconductor companies.

Since the Act’s passage, some progress has been made. Companies like Intel and Taiwan Semiconductor Manufacturing Company (TSMC) have received funding. TSMC has notably committed at least $100 billion over the next four years to establish chip manufacturing plants in the U.S. However, expanding domestic production is a lengthy process, as highlighted by Intel’s recent, repeated delays in the construction of its Ohio chip manufacturing facility.

The proposed tariffs emerge amidst ongoing uncertainty regarding U.S. policy on AI chip export restrictions, which govern which countries can acquire advanced semiconductors crucial for AI systems. In May, the Trump administration formally revoked the Biden administration’s chip AI export rules. Those previous regulations had implemented a tiered, country-specific approach to limiting chip exports based on national security concerns. Following this, the Trump administration released its AI Action Plan in July, which underscored the necessity of U.S. chip export restrictions but offered few specific details on their potential structure. Recent reports from Semafor, citing industry sources, indicate that the Trump administration is now deliberating whether to proceed with its original plan to rescind and replace Biden’s AI export rules.