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Trump’s semiconductor tariff announcement exempts major players while creating uncertainty around policy implementation and scope
Industry experts warn that vague details could disrupt global supply chains despite exemptions for companies with US investments

In what has become a familiar pattern since taking office, President Donald Trump delivered another tariff bombshell on Wednesday, this time targeting the US$600 billion global semiconductor industry with a punishing 100% levy. The Trump semiconductor tariff announcement represents the latest escalation in an aggressive trade strategy that has already imposed reciprocal tariffs on over 60 countries and threatened duties on everything from automobiles to pharmaceuticals.

Unlike previous broad-brush tariff threats, however, this semiconductor-focused policy carries potentially catastrophic implications for the interconnected global economy. Chips power virtually every modern device—from smartphones and cars to AI servers and medical equipment—making them the invisible backbone of digital civilisation.

A 100% tariff on these critical components could theoretically double costs for any company lacking a US manufacturing presence, threatening to disrupt supply chains that took decades to build and optimise.

Speaking from the Oval Office alongside Apple CEO Tim Cook, Trump declared his intention to impose the tariff on “all chips and semiconductors coming into the United States,” while carving out what may prove to be a crucial lifeline: exemptions for companies that are “building in the United States.”

The announcement highlighted the tech giant’s expanded US$600 billion investment commitment as a prime example of the exemption criteria. “If you’re building in the United States of America, there’s no charge, even though you’re building and you’re not producing yet,” Trump stated during the White House event.

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Major players secure exemptions

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer, secured exemption status through its US$165 billion US investment commitment, which includes three fabrication plants in Arizona. The company’s shares surged nearly 5% following confirmation from Taiwan’s National Development Council that TSMC would not face the proposed tariffs.

South Korean semiconductor giants Samsung Electronics and SK Hynix also gained exemption status. Trade Minister Yeo Han-koo confirmed that both companies would avoid the 100% tariffs, citing South Korea’s most-favoured-nation status under bilateral trade agreements. Samsung has committed $37 billion to establish chip manufacturing facilities in Texas, while SK Hynix is investing $3.87 billion in an advanced packaging facility in Indiana.

The exemption announcements triggered a relief rally in tech stocks, with Apple gaining 3.3% in premarket trading and Samsung Electronics climbing 2.5%. Nvidia and Intel also saw gains as investors interpreted the policy as favourable to companies with substantial US manufacturing commitments.

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Implementation details remain unclear

Despite the high-profile announcement, industry experts emphasise that critical implementation details remain undefined. “It’s still too early to pin down the impact of the tariffs on the semiconductor sector,” Ray Wang, research director at The Futurum Group, told CNBC. “The final rule is likely still being drafted, and the technical details are far from clear at this point.”

Stacy Rasgon, senior US semiconductor analyst at Bernstein, highlighted the complexity surrounding tariff scope, noting that most semiconductors entering the US arrive embedded in consumer goods such as smartphones, PCs, and automobiles. Questions persist about whether the tariffs will apply solely to raw semiconductors or extend to finished products containing chips.

The policy’s qualification criteria for exemptions also lack specificity. Industry observers wonder how much US manufacturing investment companies must demonstrate to avoid tariffs, and whether design companies like Qualcomm that manufacture through overseas foundries would qualify for exemptions based on their foundry partners’ US investments.

Supply chain complexity challenges

The semiconductor industry’s intricate global supply chain presents additional implementation challenges. According to the Information Technology and Innovation Foundation, the US imported US$46.3 billion of semiconductors in 2024, representing only about 1% of all US imports.

However, semiconductors enable US$7 trillion in global economic activity annually through their role in AI, automotive, and consumer electronics applications. The confusion around chip tariffs intensified after the US Department of Commerce initiated a national security investigation of semiconductor technology imports in April, coinciding with the sector’s exemption from Trump’s earlier “reciprocal” tariffs.

Regional impact varies significantly

While major multinational corporations appear insulated from the tariff threat, smaller markets face substantial challenges. The Philippines, where semiconductors constitute 70% of exports worth approximately US$30 billion annually, faces what industry leader Dan Lachica called “devastating” impact from the proposed tariffs.

Lachica noted that about 15% of Philippine semiconductor exports, valued at US$6 billion, are US-bound, though he acknowledged that larger multinational semiconductor packaging companies already maintain US operations.

The European Union reportedly secured a uniform 15% tariff rate on its primary exports, including semiconductors, pharmaceuticals, and automobiles, though questions remain about whether the 100% semiconductor-specific tariff might override existing agreements.

Market consolidation concerns

James Sullivan, managing director at J.P. Morgan, suggested the policy could “continue to consolidate market share amongst the largest cap players in the space,” as major companies with substantial resources can more easily meet US investment requirements.

Daniel Newman, CEO of The Futurum Group, identified companies like Apple, Nvidia, and TSMC as “clear winners” with the “most dollars to pledge,” while noting that smaller companies lacking scale and leverage will face more difficult negotiations.

Trump’s latest tariff gambit reveals the inherent contradictions in using blunt trade instruments to reshape sophisticated global industries. While the administration celebrates investment announcements from Apple and other tech giants, the policy essentially holds the broader electronics ecosystem hostage to extract manufacturing commitments that may prove economically inefficient.

The exemption-based approach creates a two-tier system that rewards companies wealthy enough to build US facilities while potentially crippling smaller players and developing economies like the Philippines.

Whether this heavy-handed strategy actually strengthens American competitiveness or merely fragments global supply chains into less efficient regional blocs remains an open question—one that billions of consumers may ultimately answer through higher device prices.