Silicon Valley was relieved when it learned on Wednesday that President Donald Trump’s tariffs, Bonanza, included exemptions to semiconductors, at least not yet fulfilled its higher import duties. But just three days later, some U.S. tech companies may find that the vulnerability actually creates more problems than they are solved. After the tariffs were announced, the White House released a list of unaffected products and did not include many chip-related items.
This means that only a few U.S. manufacturers will be able to continue purchasing chips without considering higher import costs. The vast majority of semiconductors entering the United States have been packaged into unexempted products such as graphics processing units (GPUs) and servers used to train artificial intelligence models. The manufacturing equipment used by domestic companies to produce chips in the United States is also not retained.
“If you are a major leverage producer of chips that are investing heavily in the U.S., then in the coming years, $100 million will be much less than in recent years,” said Martin Chorzempa, a senior researcher at the Peterson Institute for International Economics.
The U.S. Department of Commerce did not respond to a request for comment.
Stacy Rasgon, senior analyst at Bernstein Research covering semiconductors, said the narrow exception of chips would have a greater negative impact on the industry. Given that most semiconductors reach U.S. borders in packaging to servers, smartphones and other products, the tariffs are equivalent to “a stadium with a mixed tariff of 40% on these things,” said Rasgon, referring to the overall import tax rate.
Lasgon notes that the semiconductor industry is dependent deep on other imports and the overall health of the U.S. economy, as the components it manufactures are in a wide range of consumer products from cars to refrigerators. “They are macro-exposed,” he said.
To determine the goods to which tariffs apply, the Trump administration relies on a complex existing system called the Uniform Tariff Plan (HTS), which organizes millions of different products sold in the U.S. market into numerical categories corresponding to different import tax rates. The White House documents list only a set of HTS codes in the semiconductor field, which are exempt from new tariffs.
For example, GPUs are often encoded as 8473.30 or 8542.31 in HTS systems, said Nancy Wei, a supply chain analyst at consulting firm Eurasia Group. But Trump’s exemption only applies to more advanced GPUs in the latter 8542.31 category. It also does not cover other code for the related type of computing hardware type. According to the company’s website, NVIDIA’s DGX Systems is a pre-configured server with a built-in GPU whose built-in GPU is encoded as 8471.50.
The line between these differences can sometimes be blurry. For example, in 2020, importers of two NVIDIA GPU models asked U.S. authorities to clarify what categories it believes they fall into. After studying the matter, the U.S. Customs and Border Protection determined that the two GPUs fall into the 8473.30 category, which is also not exempt from tariffs.
