According to a Wall Street Journal report, the Trump administration is considering new tariffs on the semiconductor sector. The plan aims to reduce reliance on chip imports and strengthen domestic manufacturing. Under the proposal, chip companies would need to produce the same number of semiconductors in the U.S. as their customers import from foreign manufacturers.
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This essentially means that chip companies such as Nvidia (NVDA), AMD (AMD), Apple (AAPL), and Dell (DELL) will have to maintain a 1:1 ratio of U.S.-made to imported semiconductors. The administration may allow temporary flexibility at the beginning to help companies adjust and increase their U.S. production.
Why Are Tariffs on Chips Needed?
Commerce Secretary Howard Lutnick has reportedly discussed the plan with semiconductor executives, citing economic and national security concerns. U.S. officials have long worried that American tech companies rely too much on chips made abroad, especially in Taiwan, which faces geopolitical and natural disaster risks that could disrupt global supply chains.
Nonetheless, the proposal has not been announced officially yet and details could change materially.
How the System Could Work
Under the new system, if a company commits to producing one million chips in the U.S., it would receive credit for that amount in advance. This allows the company and its clients to import the same number of chips without incurring tariffs until the domestic facility becomes operational.
The process could be challenging for firms such as Apple and Dell, which import products containing many different kinds of chips from around the world. The plan would require them to track the origin of all those chips and coordinate with manufacturers to balance the number of U.S.-made and foreign-made products over time.
At the same time, the new plan would be rewarding for companies that have already planned to expand U.S. manufacturing. Companies such as Taiwan Semiconductor (TSM), Micron (MU), and GlobalFoundries (GFS) could leverage the situation since they will have greater bargaining power with their customers.
The Plan Could Face Broader Challenges
The administration is investigating how chip imports impact national security and plans to announce new tariffs once the review ends. Despite billions in subsidies from the 2022 Chips Act, many customers still prefer cheaper foreign products.
Balancing U.S. chip production with imports is harder than just boosting local investment since foreign chips are cheaper, supply chains are complex, and expanding domestic supply takes time. The new plan pushes companies to use U.S.-made chips by threatening tariffs, but it may face problems with advanced or specialized chips that are hard to make in the U.S.
Which Is the Best Chip Stock, According to Analysts?
We used the TipRanks Stock Comparison Tool for Best Chip Stocks to determine which company is favored by analysts.
Currently, analysts have assigned a “Strong Buy” consensus rating on Nvidia, Taiwan Semi, Marvell Technology (MRVL), and Broadcom (AVGO), with NVDA stock offering the highest upside potential among them.
