The White House on January 14 announced actions under the Section 232 investigation into whether imports of semiconductors, related manufacturing equipment, and their derivative products “threaten to impair the national security,” as laid out in the Trade Expansion Act of 1962. While the scope of the investigation covered nearly $400 billion of imports, the administration has initially applied tariffs much more narrowly.
Sparing the AI Boom: The administration announced it is imposing a 25% tariff on a narrow range of “certain advanced computing chips, such as the NVIDIA H200 and AMD MI325X,” but only doing so in instances where the chips are later exported. As a White House fact sheet explains, “This tariff will not apply to chips that are imported to support the buildout of the U.S. technology supply chain and the strengthening of domestic manufacturing capacity for derivatives of semiconductors.” Other domestic uses are also unaffected. The administration evidently wished to avoid undercutting the ongoing economic expansion driven by investments in AI, data centers, and the ICTS sector generally, which has generally been spared tariffs over the past year.
An Export Tax: The main effect of the proclamation is to execute the White House agreement with NVIDIA allowing the export to China of its Taiwan-made H200 chips. On January 13, the administration issued a new licensing rule for these chips requiring that they undergo third-party testing in the United States before being shipped to China. The combination of that requirement and the tariff represents the fulfillment of the White House plan to tax the chip sales to China. (One complication is that Chinese customs authorities are reportedly banning the importation of H200 chips and directing domestic firms to avoid purchasing them.)
Tariff Offsets? Further, the president directed the Commerce Secretary and U.S. Trade Representative to negotiate agreements with foreign governments “to address the threatened impairment of the national security” ostensibly arising from imports covered by the investigation. The fact sheet also signaled the administration “may impose broader tariffs on imports of semiconductors and their derivative products, as well as an accompanying tariff offset program to incentivize domestic manufacturing as previously announced.”
The Chamber submitted detailed comments to the Department of Commerce at the beginning of the Section 232 investigation.
Taiwan Deal: Separately, the United States on January 15 announced a trade agreement with Taiwan focusing on “restoring American semiconductor manufacturing leadership.” Commerce Secretary Lutnick told CNBC that the U.S. secured at least $250 billion in production capacity investment from Taiwanese semiconductor companies plus another $250 billion in credit “backed by the Taiwan government.” The announcement focused on Commerce-led issues relating to Section 232 and investment issues; USTR continues to negotiate toward a so-called “reciprocal trade agreement” that would reportedly reduce Taiwanese duties and non-tariff barriers.
A Commerce Department fact sheet outlines the following outcomes: