The tariff applies to a narrow group of strategic chips as broader semiconductor tariffs remain on hold.
US President Donald Trump has enacted a 25% tariff on imports of specific cutting-edge semiconductors as part of a major deal that enabled Nvidia Corp. to effectively ship Taiwan-made H200 artificial intelligence processors to the Chinese market.
Concerning the president’s order released on Wednesday, January 14, sources close to the situation, who wished to maintain anonymity due to the confidential nature of the matter, noted that the government was instructed to tax the chips immediately upon arrival in the US before being sent to clients based in China and other nations.
Nvidia, which designs the H200 processor, depends on Taiwan Semiconductor Manufacturing Company (TSMC) for its production and received approval from the Trump administration in December to sell the chip to China.
Speaking at a signing event on Wednesday, President Trump said the 25% tariff was “not the highest level, but a very good level,” adding that strong demand from China and other markets would allow the US to capture a share of the sales.
Trump has delayed tariffs on a broader range of imported chips after a Section 232 investigation found they could pose national security risks. In his proclamation, he directed Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer to negotiate import agreements and report back within 90 days, while a White House fact sheet signaled that new tariff rates and incentives for domestic chip manufacturing could be announced soon.
At this point, a White House fact sheet was released, hinting at the possibility of Trump adopting new tariff rates and a program to foster domestic manufacturing very soon.
On the other hand, Trump admitted in the proclamation that, “The 25% tariff affects a very specific group of semiconductors that are crucial to my administration’s AI and technology plans.”
Following his statement, the fact sheet highlighted that this group consists of the H200 and Advanced Micro Devices Inc.’s MI325X. However, analysts conducted research and discovered that Trump had granted an exemption for chips imported to support the development of the country’s technology supply chain.
Trump’s recent move in the tech ecosystem comes a day after reports revealed that the Commerce Department’s Bureau of Industry and Security eased its established regulations for issuing licenses to export H200 chips to China.
Following this news update, analysts weighed in on the situation. They alleged that Trump demanded an extra fee in return for permitting Nvidia to export its products to China.
Nonetheless, sources mentioned that the US is still required to implement further action before the tech giant can effectively send the chips to the Asian country. Some of these efforts include securing export permits from BIS. This approval process is expected to take weeks or even months. Surprisingly, it is unclear when this process will be completed.
Currently, goods produced in Taiwan are subject to a 20% tariff, imposed in August last year, when imported to the United States. For semiconductors, they are exempt from this tariff rate as Commerce officials investigate some of the national security concerns raised, which demand an answer on whether newly imposed tariff rates should be applied throughout the chip industry. So far, the president has delayed the imposition of tariffs as negotiations between Taiwan and leading tech firms have stalled.
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