White House Announces New Tariffs Targeting Advanced AI Processors
Under a new national security order, President Donald Trump put a 25% tax on some artificial intelligence chips. The order includes Nvidia’s H200 processor and AMD’s MI325X chip, both of which must meet strict performance standards.
The White House said the decision was made after a nine-month investigation under Section 232 of the Trade Expansion Act. Officials said that the measure was necessary to protect domestic semiconductor supply chains and maintain long-term technological leadership.
Source: The Guardian
Tariff Policy Aims to Strengthen Domestic Semiconductor Production Capacity
The government said that right now, the US only makes about 10% of the chips it uses at home. Officials said that relying too much on foreign suppliers is a big risk to both the economy and national security.
The tariff is meant to get chipmakers from around the world to make more chips in the United States. Officials said that one of their goals was to reduce strategic reliance on Taiwanese manufacturing facilities and other overseas fabrication centers.
Exemptions Granted for Data Centers Startups and Public Sector Use
The White House made it clear that chips brought into the US for data centers will still not be subject to the new tariffs. Exemptions also apply to startups, consumer electronics, civil industrial applications, and purchases made by the government.
Commerce Secretary Howard Lutnick was given a lot of power to approve more exemptions when they were needed. Officials said that flexibility was meant to protect important infrastructure development and innovation ecosystems.
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Markets React Cautiously as Major Chip Stocks Edge Lower
After the announcement, shares of Nvidia, AMD, and Qualcomm traded a little lower in the after-hours market. Analysts said the reaction was calm because the exempted customer segments didn’t have a lot of immediate revenue exposure.
Investors also thought about earlier signs that wider semiconductor tariffs might come later. People in the market are still wary of possible long-term changes to global supply chains and price stability.
China Policy and Export Controls Shape Broader Semiconductor Strategy
Trump had already threatened to put tariffs on Chinese semiconductor imports because of Beijing’s policies for expanding its industries. That action was put off until June 27, 2020, when a different Section 301 investigation was finished.
The government recently made it necessary for chips going to China to go through US labs for third-party testing. When those shipments arrive in the United States, they will be subject to the new 25% tariff.
Legal and Constitutional Questions Surround Revenue Sharing Proposal
In the past, Trump suggested that Nvidia be allowed to sell H200 chips to China in exchange for sharing profits with the government. Legal experts wondered if these kinds of deals break the Constitution’s limits on taxing exports.
Nvidia didn’t want to say anything about the new tariff decision, but AMD did say that they follow all export control rules. Industry groups have not yet come up with a unified response to the new policy framework.
Tariff Expansion Reflects Broader Manufacturing and Security Agenda
The government has put high tariffs on a number of industries, including pharmaceuticals, cars, steel, and heavy industrial equipment. Officials say that bringing back manufacturing in the US makes the country more resilient during times of geopolitical instability.
Fact sheets say that broader semiconductor tariffs may still be put in place in the future to speed up factory investment. Any new duties will not be added to the current tariffs on metals, cars, or industrial machinery.
