The turbulence rocking the global semiconductor market is poised to escalate further as President Donald Trump on Tuesday told CNBC’s Squawk Box that his administration plans to announce a new wave of tariffs on semiconductors and chips “within the next week,” marking a sharp turn in U.S. trade and industrial policy.
The announcement comes on the heels of an ongoing Section 232 investigation launched in April into national security risks posed by U.S. reliance on foreign-made chips — a probe that many experts had warned could set the stage for punitive tariffs.
Though Trump did not provide specific details about the tariff rates or scope, policy insiders anticipate the administration could begin with a 25% levy on imported chips, with the potential to expand the coverage and rate depending on supply chain vulnerabilities and geopolitical concerns. The Wall Street Journal reported that the tariffs could also target pharmaceutical products, but the chip measures appear to be more imminent.
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The reaction was swift across financial markets. Shares of chipmakers including Nvidia, Broadcom, and other semiconductor giants tumbled on Tuesday. The Philadelphia Semiconductor Index dropped 1.1%, while the iShares Semiconductor ETF (SOXX) lost 0.7%. Investors are bracing for ripple effects across the U.S. tech sector, particularly for firms heavily reliant on imported hardware components.
The tariff plan comes even as the U.S. attempts to rebuild its semiconductor supply chain under the 2022 CHIPS and Science Act, which earmarked $52 billion in subsidies to bolster domestic chip production. At the time the law was signed, the U.S. produced only around 10% of the world’s chips, despite being home to more than half of the leading semiconductor design firms.
Major players like Intel and Taiwan Semiconductor Manufacturing Company (TSMC) have already received support under the program. TSMC has committed to investing at least $100 billion over four years to build and expand its U.S.-based manufacturing facilities. But establishing chip fabs — massive, clean-room manufacturing plants — is a long, expensive process. Intel’s repeated delays in building its flagship plant in Ohio underscore the difficulty of scaling production quickly, even with government funding.
The U.S. remains far from achieving full supply chain independence, raising concerns that new tariffs could end up hurting domestic industries more than their intended foreign targets, at least in the short term.
Reversal on AI Chip Export Rules Sows Further Confusion
Complicating the picture is the administration’s shifting stance on AI chip export controls. In May, Trump formally rescinded the Biden administration’s rules that placed tiered, country-specific restrictions on the export of advanced semiconductors used in artificial intelligence systems. The Biden-era framework had focused on national security threats, particularly around China’s access to high-performance chips from companies like Nvidia and AMD.
Trump’s administration followed the repeal with the release of a broad AI Action Plan in July, which emphasized the need for stricter export controls. But the document was vague on how such rules would be implemented. And now, according to reporting from Semafor, senior officials within the administration are internally debating whether to go through with their plan to replace the Biden rules or abandon the effort altogether. Sources close to the matter say no final decision has been made.
This policy uncertainty is unsettling to U.S. chipmakers and AI firms, many of which operate in both consumer and defense-adjacent sectors. Without a clear regulatory roadmap, companies are struggling to plan long-term strategies and are voicing growing frustration over the uncertainty.
High Stakes for the U.S. Tech Ecosystem
The combination of looming tariffs and murky export controls is setting the stage for a pivotal period in the U.S. tech industry. On one hand, the administration appears determined to reduce America’s dependence on foreign chips — particularly from Asia — and to secure domestic control over the next generation of computing infrastructure. On the other hand, the tariffs could raise costs for U.S. firms and consumers in the short term, while regulatory unpredictability may hinder innovation and investment.
Despite the billions poured into the CHIPS Act, the U.S. still lacks the capacity to meet domestic chip demand. That gap means tariffs may do more to squeeze American companies than foreign competitors, at least until domestic manufacturing catches up.
If Trump follows through with the tariff announcement as expected next week, the semiconductor sector could face a dramatic shake-up, compounding what has already been a volatile year for chips, AI hardware, and the entire tech supply chain.