President Donald Trump said that he wants to slap a 100% tax on computer chips that come from other countries. This may make a lot of electrical devices, including smartphones, cars, and household appliances, a lot more expensive. However, there is a significant exception to the new rule: companies manufacturing chips in the United States will not be required to pay the import tax.
During a meeting with Apple CEO Tim Cook in the Oval Office, Trump made the news. Trump said, “We’re going to put a tariff of about 100% on chips and semiconductors.” “But you don’t have to pay if you build in the United States.”
This policy is a big change from how the Biden administration did things. The bipartisan CHIPS and Science Act of 2022, which was signed into law by former President Joe Biden, gave more than $50 billion in financing, tax credits, and other incentives to stimulate semiconductor production in the United States. Trump, on the other hand, is using the fear of high tariffs to get corporations to bring their factories to the U.S.
Some of the biggest IT businesses on Wall Street reacted positively to the news. After the news, Apple’s stock price, which had already gone up 5% during regular trading, went up another 3% in extended trading. This is probably because the corporation has promised to put money into U.S. production recently. Since Trump took office again in January, Big Tech companies have promised to invest approximately $1.5 trillion in the U.S., with Apple alone promising a huge $600 billion. The question is whether these investments and the bargain that Cook and Trump reached will be enough to protect items like the millions of iPhones built in China and India from other tariffs that are already in place.
Other big chipmakers that have big commitments in the U.S. also saw their stocks rise. The shares of AI chipmaker Nvidia, which has put a lot of money into the U.S., went up in extended trading. This is on top of a $1 trillion increase in market value since the start of the second Trump administration. Even the stock price of Intel, a chip pioneer that has been around for a long time and has had some problems lately, went up after the news.
Experts are worried that the new strategy could lead to increased prices for consumers and inflation, even if it is clearly meant to boost domestic manufacturing. The COVID-19 epidemic caused a worldwide shortage of computer chips, which showed how important these parts are to the global economy and how their lack can raise prices for many goods. The World Semiconductor Trade Statistics organization says that global sales of computer chips rose by 19.6% in the year ending in June. This shows that the demand for computer chips is still growing.
Neither Nvidia nor Intel answered questions right away, and the Semiconductor Industry Association didn’t want to comment.