Washington: The Trump administration is reportedly considering a plan to impose tariffs on imported electronic devices according to the number of chips each product contains, Reuters reported, citing three sources. The move aims to encourage manufacturers to shift production to the United States and reduce reliance on foreign semiconductor imports.
Proposed chip-based tariffs
Under the plan, the US Commerce Department would calculate tariffs as a percentage of a product’s estimated chip value. Preliminary discussions suggest a 25% tariff rate on chip content, with a lower 15% rate possibly applied to electronics imported from Japan and the European Union. Details regarding the exact scope of affected products, exemptions, and final tariff rates remain uncertain.
White House spokesperson Kush Desai said, “America cannot be reliant on foreign imports for the semiconductor products that are essential for our national and economic security. The Trump administration is implementing a nuanced, multi-faceted approach to reshoring critical manufacturing back to the United States with tariffs, tax cuts, deregulation, and energy abundance.”
Impact on consumers and economy
If implemented, the tariffs could affect a broad range of consumer goods, from laptops to everyday electronics like toothbrushes, potentially raising costs for US households. Economists warn the move could also exacerbate inflation.
Michael Strain, an economist at the conservative American Enterprise Institute, said, “The move would push up consumer prices at a time when the US has an inflationary problem, with inflation clearly above the Fed’s target and accelerating. Even domestically produced goods could get costlier due to higher tariffs on imported inputs.”
The policy could particularly affect major non-US chipmakers, including Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics of South Korea.
Past tariffs and security concerns
The Trump administration has previously rolled out sweeping tariffs this year, including 100% duties on branded drugs and 25% on heavy-duty trucks. Earlier in April, probes into pharmaceuticals and semiconductors were launched, citing national security concerns over foreign reliance.
Potential exemptions linked to investment in US manufacturing have been discussed. For example, companies could receive dollar-for-dollar credits if they shift at least half their production to the United States. However, earlier proposals to exempt chipmaking tools faced pushback, reportedly because Trump dislikes carve-outs.
Conclusion
The chip-based tariff proposal highlights the Trump administration’s focus on reshoring critical manufacturing and reducing dependence on foreign semiconductor suppliers. While the policy could strengthen domestic production, it also carries risks of higher consumer prices and potential disruption to global electronics supply chains.