On August 6, US President Donald Trump announced a 100% tariff on all imported semiconductors and chips into the US, marking a major policy shift aimed at reshoring production and reducing reliance on foreign-made electronic components.
Speaking from the Oval Office, Donald Trump said, “We’ll be putting a tariff of approximately 100% on chips and semiconductors… But if you’re building in the United States of America, there’s no charge.” That means only foreign-made chips will face the 100% import tax, while companies manufacturing within the US will be exempt.
During the Covid-19 pandemic, a shortage of computer chips increased the price of automobiles and contributed to an overall rise in inflation across the United States and other major economies.
Chip demand is accelerating globally. According to the World Semiconductor Trade Statistics (WSTS) group, global semiconductor sales grew 19.6% in the year ending June. This highlights how critical chips have become in every sector of the global economy.
Ahead of Trump’s announcement, Apple pledged an additional $100 billion toward US manufacturing, raising its total commitment to $600 billion. The company is likely to be exempt under the new rules, aligning with Trump’s policy to reward domestic loyalty.
Major firms such as Taiwan Semiconductor Manufacturing Company (TSMC), Nvidia, GlobalFoundries, and Texas Instruments have pledged over $600 billion across 130 projects in the US. These include major fabs in Arizona, Texas, New York, and Vermont, signalling a shift to local capacity.
With foreign chips now subject to 100% tariffs, experts warn of rising prices on everyday products. Electronics, cars, televisions, and refrigerators may all become costlier as companies pass on higher input costs to consumers.
Unlike past efforts focused on incentives, Trump’s penalty-based approach marks a clear shift in strategy. The 2022 CHIPS and Science Act passed under then-President Joe Biden provided over $50 billion in funding, tax incentives, and research support to attract chipmakers to the US—a model Trump openly criticises.
Trump’s tariff push signals a shift from earlier incentive-based efforts like the CHIPS Act. While several tech giants have already committed billions to US chip projects, it remains to be seen how companies and global markets respond as the new import duties take effect.
