President Donald Trump’s plan on 100% tariffs on computer chips not made in the US has caused confusion among businesses and trading partners.
“We’re still waiting for official guidance,” said Limor Fried, founder and engineer at Adafruit Industries, a small electronics manufacturer in New York.
The chips that enter Adafruit’s products are direct from US sales and distribution companies, as well as companies in the Philippines and Taiwan.
If these chips are not exempt, “semiconductors are the most expensive components in an assembly, which increases the cost of design,” Freed said. “For many of these tariffs, we often have to wait until we get a bill to know the exposure, then we adjust the pricing to explain the increase.”
The US imports relatively few chips, as most of the foreign chips in devices from iPhone to car, were already assembled into products or parts of the product before landing in the country.
“The real question everyone in the industry is asking is whether there is a component tariff, and when the chips in the device require some sort of individual tariff calculation,” said Martin Cholzenpa, senior fellow at the Institute for International Economics at the Peterson Institute.
Trump said On Wednesday, companies that “promised to build” in the US will be spared import taxes, even if they haven’t yet produced those chips in their American factories.
“We will impose about 100% tariffs on chips and semiconductors,” Trump said. I said in the oval office While meeting with Apple CEO Tim Cook. “But if you’re built in the United States, there’s no fee.”
Wall Street investors interpreted it as good news as well as US companies such as Intel and Nvidia, as well as the biggest Asian chipmakers, such as Samsung and Taiwan Semiconductor Manufacturing Company, are working on building US factories.
However, small ship manufacturers in Europe and Asia have little exposure to the artificial intelligence boom, but there remains a great deal of uncertainty in inserting semiconductors into essential products such as cars and washing machines.
These producers “maybe not large enough to reach the map due to exemptions, and probably won’t have the excess capital and margins to add large investments to the US,” Chorzempa said.
It is also unclear how chip-specific tariffs will apply to trading partners who already have a wide range of transactions with Trump, including agreements with the European Union, Japan and South Korea taxing 15% on most products.
The announcement came more than three months later Trump has been temporarily exempted Most electronics from the most troublesome tariffs of his administration.
Between COVID-19 Pandemicshortages in computer chips have led to car prices rising and inflation rates have increased. Chorzempa said that if the semiconductors in the vehicle are not exempt, chip tariffs can increase the price by just a few hundred dollars per vehicle.
“There’s a tip that lets you open the window and close it,” Cholzenpa said. “There are chips running entertainment systems. There are chips running all the electronics. EVs in particular have chips that are power management.
Much of the investment in the construction of US chip factories began as bipartisan Chips and Science Method President Joe Biden signed the law in 2022, providing more than $50 billion to support new computer chip plants, fundraising and train workers in the industry.
Trump has opposed these financial incentives and has taken a different approach, betting that the threat of dramatically higher CHIP costs will force most businesses to open their factories domestically despite the risk that most companies can squeeze their profits and push the prices of electronics.
