Trump Imposes 25% Tariff on Advanced Chips with Domestic Exemptions
President Donald Trump has announced a 25% tariff on certain high-end computing chips, including Nvidia’s H200 and AMD’s MI325X, while allowing exemptions for chips imported to support the domestic tech supply chain. The White House noted the exemption but did not clarify the specific criteria companies must meet to qualify. Officials also indicated that broader tariffs on other semiconductors and related products could follow in the near future.
Strategic Move to Strengthen US Technology Manufacturing
The tariffs are part of Trump’s ongoing efforts to expand domestic technology production and reinforce the United States’ leadership in artificial intelligence. Nvidia’s chips, which power AI data centers, are central to this strategy, and CEO Jensen Huang has been directly involved in discussions around trade and export regulations.
The White House cited national security as the primary reason for the new tariffs, invoking Section 232 of the Trade Expansion Act of 1962. This legislation allows the president to impose tariffs on products considered critical to national security. Under this framework, the exemptions are designed to encourage companies to develop and manufacture chips domestically rather than rely entirely on imports.
Nvidia welcomed the announcement, stating that allowing H200 chips for approved customers vetted by the Department of Commerce “strikes a thoughtful balance and supports high-paying jobs and American manufacturing.” AMD also confirmed its compliance with all U.S. export control laws, signaling support for the administration’s approach while remaining cautious about regulatory requirements.
Balancing Trade, AI, and Domestic Production
This is not the first time Trump has introduced the concept of exemptions to incentivize local production. In August, he threatened a 100% tariff on chips and semiconductors but indicated that companies committing to U.S.-based manufacturing would be spared.
Trump has made AI development a key focus of his administration, signing multiple executive orders to streamline regulations and encourage domestic adoption of AI technology. At the same time, tight export controls to China have drawn criticism from industry leaders like Jensen Huang, who argue that such restrictions could inadvertently accelerate China’s own AI and chip advancements.
The tariffs put semiconductor giants, particularly Nvidia, at the center of U.S.-China trade tensions. In August, both Nvidia and AMD agreed to remit 15% of certain chip sales in China to the U.S. government, though this applied primarily to older products. Trump had previously indicated that the H200 chip could be sold in China with a 25% tariff applied, reinforcing the administration’s focus on maintaining a technological edge.
Trump first signaled his intention to impose a 25% tariff on advanced chips in February, with an expected rollout by April. However, the formal investigation into chip imports—which laid the groundwork for Section 232 tariffs—was initiated months later. These tariffs are distinct from ongoing legal challenges regarding other trade restrictions, some of which are currently under review by the Supreme Court.
Overall, the new chip tariffs reflect the administration’s dual goals: promoting domestic manufacturing while controlling the flow of critical technology overseas. By linking exemptions to U.S.-based production, the policy aims to boost local jobs and ensure the United States remains at the forefront of semiconductor and AI innovation.
