The Trump administration is said to be preparing a new wave of expansive tariffs targeting imported semiconductors. This has triggered a sharp pushback from technology leaders who warn the move could derail American ambitions to lead the global artificial intelligence (AI) race. Citing eight people familiar with internal discussions, Politico reports that under the framework being considered, import duties will not be limited to raw silicon, and that the policy may broaden to hit hardware built with chips, including enterprise data center servers, consumer laptops and video game consoles.
What are the proposed trade mechanisms
Commerce Secretary Howard Lutnick is backing a framework that connects tariff relief directly to foreign investments in US semiconductor fabrication facilities, aiming to force manufacturing back onto American soil. The system advocated by Lutnick is said to permit a fixed volume of semiconductors to enter the country duty-free, with import allowances scaled to the level of domestic production a firm pledges inside the US.Officials are also reported to be exploring tiered tariff percentages and volume caps tailored to specific trading partners and their premier semiconductor manufacturers. Moreover, government planners are reportedly evaluating a transition schedule for the new duties, though sources emphasised that the entire blueprint remains subject to major revisions in the coming months.The looming trade measures expose a tension within the administration’s economic agenda: its mandate to revive domestic chipmaking runs directly into its goal of winning the international race for AI dominance.This comes as American technology giants are pouring hundreds of billions of dollars into massive server campuses, driving surging demand for cutting-edge chips. Industry advocates warn that imposing duties on foreign components will sharply inflate project costs, potentially forcing companies to scale back or abandon planned data centers.“This data center buildout, in scale and dollars, has been compared to building the transcontinental railroad. Anytime you add to the cost and decrease predictability you make it more difficult to invest, and you are putting that in jeopardy,” Jonathan McHale, head of digital policy at the Computer and Communications Industry Association, whose members include Amazon, Google, and Meta, was quoted as saying.Defending the administration’s direction, White House spokesperson Kush Desai stated:“Reshoring semiconductor manufacturing is a top priority for President Trump, whose policies have already secured hundreds of billions of dollars of investments in this key sector. The Trump administration remains focused on delivering more investments and economic relief for the American people while safeguarding our national security.”