In a move to reinforce American semiconductor manufacturing and maintain competitive positioning in the artificial intelligence (AI) domain, the Trump administration is deliberating imposing expansive tariffs on imported chips. Concurrently, the government is crafting a nuanced exemption framework specifically designed to protect major U.S. technology firms heavily involved in AI development and data center expansion, according to sources familiar with the policy considerations.
The proposed tariffs would broadly target semiconductors entering the United States, a critical component in the supply chain of numerous technology products. However, the Commerce Department envisages tailored carve-outs for hyperscale cloud service providers such as Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corp. (NASDAQ: MSFT), and Alphabet Inc. (NASDAQ: GOOG and GOOGL), ensuring these companies avoid increased costs on the chips that fuel their AI infrastructure.
This exemption strategy is intimately connected to Taiwan Semiconductor Manufacturing Company (NYSE: TSM), the dominant contract chip manufacturer globally and a key supplier to many American tech giants. At the core of the plan is an arrangement that would grant tariff relief tied to TSMC’s sizeable investment commitments on U.S. soil. The chipmaker has pledged $165 billion toward expanding its manufacturing presence in the United States, constituting a pivotal element of broader American efforts to reduce dependency on foreign semiconductor production.
Under an existing trade agreement between the United States and Taiwan, companies like TSMC constructing semiconductor fabrication plants domestically gain the ability to import chips exempt from tariffs proportionally aligned with their anticipated U.S. manufacturing capacities. This provision would allow TSMC to extend these exemptions to its American customers, mitigating the potential financial impact of the new import tariffs for major AI-powered enterprises.
While the prospect of carve-outs offers relief to key technology firms, administration officials insist the framework is still under development. One government representative conveyed to press that the policy will undergo meticulous examination to prevent it from becoming a mere concession favoring TSMC disproportionately, ensuring it aligns cohesively with the broader strategic tariff objectives set by the administration.
Attempts to secure comments from TSMC, the Commerce Department, and the White House were unsuccessful as of the report’s publication.
Previously, in January, the administration introduced a selective tariff regime imposing a 25% duty on a limited category of semiconductor products imported into the U.S. and subsequently re-exported to China, including products by Advanced Micro Devices, Inc. (NASDAQ: AMD) and Nvidia Corp (NASDAQ: NVDA). This measure stemmed from an accord permitting Nvidia to ship certain high-performance computing chips to China, compensating with a 25% government sales cut.
Currently, these tariffs apply narrowly to chips destined for re-export to China. Chips used domestically for advancing AI infrastructure remain exempt to date, underscoring the administration’s focus on protecting nascent technological ecosystems within U.S. borders.
Following the disclosure of tariff and exemption considerations, stock movements in after-hours trading reflected modest changes: Amazon shares rose by approximately 0.08%, Microsoft advanced around 0.49%, while Alphabet’s Class A and Class C shares saw slight declines under 0.1%, reflecting investor caution. Market analytics indicated Amazon, despite favorable quality rankings, exhibited negative price trends across multiple time horizons.
These policy developments come amid intense competition among tech companies to build and operate data centers powering the next generation of artificial intelligence applications, underscoring the strategic importance of semiconductor supply chains and manufacturing footprints.