US to Impose 'Substantial' Tariffs on Semiconductors
U.S. President Donald Trump has announced plans to impose a "fairly substantial tariff" on imported semiconductors. The statement was made during a White House dinner with leading technology executives. While the exact rate and timeline were not specified, this move follows earlier threats of a 100% levy on chips from firms that do not invest in the United States. The policy is part of the ongoing high-stakes tech race with China and is expected to significantly impact global supply chains and Asian chipmakers.
Unpacked:
The U.S. began imposing tariffs on Chinese semiconductors in 2018, citing unfair trade practices and national security concerns. This escalated a broader trade war, with both countries enacting tit-for-tat tariffs on each other’s goods, and was partly motivated by U.S. efforts to limit China's technological advancement and address the trade deficit.
Earlier tariffs disrupted global supply chains by increasing costs and prompting companies to seek alternative suppliers or relocate production. Asian chipmakers, especially in China, faced reduced exports and wage pressures, although global export growth was only temporarily affected as markets adjusted.
New tariffs may intensify the tech rivalry, provoke Chinese retaliation, and complicate ongoing trade negotiations. They could also impact global technology markets, heighten geopolitical tensions, and lead to further decoupling of U.S. and Chinese supply chains.
Semiconductors are vital for national security and economic competitiveness, powering everything from consumer electronics to military systems. The U.S. fears losing technological leadership to China, which is rapidly investing in self-sufficiency, prompting policies to restrict Chinese access to advanced chip technology.