In a significant development for the semiconductor industry, the Trump administration has announced a 25% tariff on certain advanced chips, designating this tariff as an initial or “phase one” move. This levy targets select high-end processors integral to cutting-edge technologies such as artificial intelligence.
Details emerged on Thursday when a senior White House official, speaking anonymously to Reuters, described the 25% tariff, imposed under national security considerations, as the first stage of a broader potential strategy. The official emphasized that this measure could be augmented by additional tariffs or restrictions depending on the progress and outcomes of negotiations with foreign governments and semiconductor manufacturers.
Previous statements from President Donald Trump have alluded to the possibility of imposing tariffs as steep as 100% on semiconductors produced beyond U.S. borders, underscoring the administration’s intent to protect domestic technology capabilities and address national security concerns.
The tariffs specifically cover a variety of high-performance semiconductors, including Nvidia Corporation’s H200 artificial intelligence processor and Advanced Micro Devices Incorporated’s MI325X chip. The U.S. Commerce Department officially announced these tariffs on Wednesday following a comprehensive nine-month investigation leveraging authority under Section 232 of the Trade Expansion Act of 1962. This statute permits the president to enforce trade restrictions if imports threaten national security interests.
Alongside this tariff announcement, the administration proclaimed a separate trade accord with Taiwan designed to bolster semiconductor production on American soil. Taiwan’s chip and tech companies have committed to investing at least $250 billion towards expanding U.S. manufacturing facilities. This investment initiative benefits from Taiwan’s government backing it with up to $250 billion in credit guarantees.
In exchange, the U.S. has agreed to limit reciprocal tariffs imposed on Taiwanese imports to 15%, a reduction from the previous 20%, while also removing certain duties on selected product categories. This reciprocal trade arrangement aims to fortify ties with a critical player in the global semiconductor supply chain and encourage enhanced domestic production capacity.
However, the timing of these developments coincides with continuing strains in the U.S. manufacturing sector. According to the December data released by the Institute for Supply Management (ISM), the Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.9, marking the lowest point of 2025 and extending the contraction in manufacturing activity for a tenth consecutive month. Industry participants surveyed cited tariff-related uncertainties and trade policy concerns as key contributors to reduced demand and operational challenges.
Market data further illustrates the complex environment for semiconductor stocks. Nvidia exhibits a short- and medium-term downward price trend but maintains a positive long-term trajectory. However, it holds a relatively weak valuation score, as assessed by Benzinga’s Edge Stock Rankings. Conversely, Advanced Micro Devices (AMD) reflects a different performance pattern although specific detailed metrics were not disclosed in the data.
In summary, the Trump administration has deployed a strategic and multi-faceted approach to safeguard domestic interests in semiconductor manufacturing, combining tariff imposition under national security rationale with significant international investment agreements. This is juxtaposed with ongoing manufacturing sector pressure and market headwinds facing key chipmakers.