Trump’s latest chip tariff announcement raises more questions than answers

After months of speculation, U.S. President Donald Trump has divulged more of his semiconductor tariff plans, but his latest threats might raise more questions than answers. 

On Wednesday, Trump said he will impose a 100% tariff on imports of semiconductors and chips, but not for companies that are “building in the United States.”

As semiconductors represent an over $600 billion industry at the heart of the modern digital economy, any potential tariffs hold massive weight. 

However, experts say the President has yet to provide key details on the policy, which will ultimately determine their full impact and targets. 

“It’s still too early to pin down the impact of the tariffs on the semiconductor sector,”  Ray Wang, research director of semiconductors, supply chain and emerging technology at The Futurum Group, told CNBC. 

“The final rule is likely still being drafted and the technical details are far from clear at this point.” 

One of the biggest questions for chip players and investors will be how much manufacturing a company needs to commit to the U.S. to qualify for the tariff exemption. 

The U.S. has been working to onshore its semiconductor supply chain for many years now. Since 2020, the world’s largest semiconductor companies such as TSMC and Samsung Electronics have committed hundreds of billions of dollars to building plants in the U.S.

Speaking to CNBC’s “Squawk Box Asia” on Thursday, James Sullivan, Managing Director and Head of Asia Pacific Equity Research at J.P. Morgan, said this could mean most major chip manufacturers receiving exemptions.

If this is the case, the policy could have the effect of “continuing to consolidate market share amongst the largest cap players in the space,” Sullivan said. 

Indeed, shares of major Asian chip companies like TSMC, which has significant investments in the U.S., rose in Thursday morning trading following Trump’s announcement. Early this year, TSMC announced it would expand its investments in the U.S. to $165 billion. 

Shares of South Korea’s Samsung and SK Hynix — which have also invested in the U.S. — were also trading up after a Korean trade envoy reportedly said on radio that the duo would be exempt from the 100% tariffs.

Beyond the question of exemptions, many other aspects of the potential tariffs remain unclear. 

Speaking on CNBC’s “Squawk Box Asia,” on Thursday, Stacy Rasgon, senior U.S. semiconductor analyst at  Bernstein, noted that most of the semiconductors that enter the U.S. come inside consumer goods such as smartphones, PCs and cars.

For example, in 2024, the U.S. imported $46.3 billion of semiconductors — only about 1% of all U.S. imports, according to the Information Technology and Innovation Foundation.

While Rasgon said tariffs on these imports may be manageable, broader tariffs would be harder to deal with. 

“What we don’t know with [Trump’s] comments on tariffs, is it just raw semiconductors? Are there going to be tariffs on end devices? Are you going to be looking at tariffs on components within end devices?,” Rasgon asked. 

The confusion and questions around semiconductor tariffs were brought to the forefront after the U.S. Department of Commerce started a national security investigation of semiconductor imports in April, just as the sector was exempted from Trump’s “reciprocal” tariffs.

The vague language from the Trump administration — though not invoked in the president’s latest proclamations — could theoretically be used to apply broad tariffs to an enormous segment of the electronics supply chain. It’s also unclear on the extent that semiconductor materials and manufacturing equipment used to manufacture chips would fall under the tariffs. 

Potential tariff strategies could also be complicated by the intricate and interdependent nature of the semiconductor supply chain. 

Rasgon gave the example of American chip designer Qualcomm, which sends their designs to TSMC to be manufactured in Taiwan and then imported to the U.S. 

“Does that mean those [chip imports] would not be tariffed, because they’re made at TSMC, and TSMC is building in the U.S.?… I don’t know. Hopefully that’s how it would be,” he said. 

Another large buyer of semiconductors in the U.S. are cloud service providers like Amazon Web Services and Google, which are essential to power Washington’s AI plans. 

According to a recent report from ITIF, semiconductors contribute $7 trillion in global economic activity annually by underpinning a range of downstream applications including AI and “big data.”

In a potential sign of American companies seeking to move their chip supply chains into the U.S., Apple CEO Tim Cook, alongside Trump at the White house Wednesday, announced that it will be supplied chips from Samsung’s production plant in Texas. 

The company also announced an additional $100 billion in U.S. investments, raising its total investment commitments in the country to $600 billion over the next four years.