Americans could soon see the price of electronics skyrocket in response to a 25-100 percent import tariff on computer chips promised by US President Donald Trump on Monday.

"In the very near future, we are going to be placing tariffs on foreign production of computer chips, semiconductors, and pharmaceuticals to return production of these essential goods to the United States of America," the US president said while speaking during the House Republican Issues Conference.

"The incentive is going to be they're not going to want to pay a 25, 50, or even a 100 percent tax," he added.

Tariffs have long been a favorite bargaining chip for Trump, who has frequently touted it as an economic incentive for forcing foreign suppliers to onshore manufacturing and/or bend the knee on geopolitical issues.

Import tariffs are typically paid by those bringing products and components into the country. High tariffs will either encourage suppliers to use more domestic production and components to avoid the import levies, and cut off foreign suppliers in favor of domestic ones, or cause the end buyer – you and me – to pick up the extra costs of importing the stuff, which will hit sales.

Talk of these import tariffs has only ratcheted up in Trump's second administration, with the president promising a 25 percent tax on goods from Canada and Mexico and a 60 percent tariff on Chinese imports. But, as we've previously reported and mentioned above, tariffs on US imports are likely to end up backfiring as companies with limited options for alternative supply chains pass on the costs as higher prices to consumers.

This is particularly concerning because if Trump does move forward with an import tax on foreign semiconductors, US shoppers and IT buyers could be hit by a double tax whammy as a large quantity of electronics assembled in China also contain foreign-made semiconductors.

Trump's latest threat of tariffs would disproportionately impact Taiwan and South Korea, which are the leading producers of advanced semiconductors for things like CPUs, GPUs, storage, and memory.

In a statement provided to Reuters, the Taiwanese government appealed to the White House, calling collaboration between the two nations on semiconductor design and production a "win-win."

Taiwan Semiconductor Manufacturing Co (TSMC) in particular has drawn the president's ire for its success in winning over US chip designers including AMD, Apple, and Nvidia. Even Intel, which has traditionally produced large quantities of chips in fabs located in the US and other allied nations has off-loaded many of its own product portfolio onto TSMC while ramping up production of its next-gen process tech back home.

Reliance on TSMC exposes American companies to higher prices if the tariffs are implemented, as domestic manufacturing options remain limited.

Both TSMC and Samsung are building fabs in the US. However, the Taiwanese foundry giant has been hesitant to manufacture its most advanced process technologies, which are favorited by US chipmakers like Apple and Nvidia, at its Arizona plants.

Meanwhile, Samsung's Taylor, Texas plant has allegedly faced delays due to poor yields on its most advanced process technologies. While Samsung has previously produced chips for the likes of Nvidia and Apple, those companies have since moved the majority of their manufacturing capacity to TSMC.

The Register reached out to TSMC and Samsung for comment; we'll let you know if we hear anything back.

For Nvidia, the bigger problem may be access to advanced packaging. Even if it can build the chips used in its GPUs, many of those parts rely on advanced packaging processes. TSMC has committed to building an advanced packaging facility in Arizona in collaboration with Amkor, however, the facility will take time to complete.

As we've previously reported, Intel plans to begin transitioning much of its portfolio back to US fabs beginning this year. However, it'll still be some time before the chipmaker has sufficient capacity to support contract manufacturing jobs.

With US semiconductor capacity yet to reach full capacity, many US chip designers may struggle to avoid negative impacts as a result of Trump's tariffs.

By: DocMemory
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