On Wednesday, Silicon Valley experienced relief when it was announced that President Donald Trump’s tariff list included an exemption for semiconductors, sparing them from immediate higher import duties. However, within three days, some U.S. tech companies may have realized that the exemption might introduce more complications than it resolves. Following the announcement of the tariffs, the White House released a list of exempted products, which notably excludes many chip-related goods.
This situation allows only a small number of American manufacturers to continue sourcing chips without facing increased import costs. The majority of semiconductors imported into the U.S. are already integrated into products that are not exempt, such as graphics processing units (GPUs) and servers used for training artificial intelligence models. Additionally, the exemption does not cover the manufacturing equipment essential for domestic chip production.
Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics, remarked that major chip producers investing significantly in the U.S. will find that a hundred billion dollars will be less effective in the coming years compared to recent ones.
The U.S. Department of Commerce did not provide a comment on the situation.
According to Stacy Rasgon, a senior analyst at Bernstein Research, the limited semiconductor exemption is unlikely to mitigate the broader adverse effects on the industry. Most semiconductors enter the U.S. as parts of servers, smartphones, and other products, leading to an approximate “40 percent blended tariff” on these items, Rasgon explained.
Rasgon also highlighted the semiconductor industry’s reliance on other imports and the overall health of the U.S. economy since its components are integral to numerous consumer products, including cars and refrigerators. “They are macro-exposed,” he added.
The Trump administration utilized the existing Harmonized Tariff Schedule (HTS), a complex system categorizing millions of U.S. market products into numerical codes with corresponding import duty rates, to determine applicable goods for the tariffs. The White House document specifies only a limited set of HTS codes in the semiconductor domain as exempt from the new tariffs.
For instance, GPUs are typically categorized under either 8473.30 or 8542.31 in the HTS system, according to Nancy Wei, a supply chain analyst at the Eurasia Group. However, Trump’s waiver only applies to more advanced GPUs within the 8542.31 category and does not cover other codes for related computing hardware. Nvidia’s DGX systems, which are pre-configured servers with integrated GPUs for AI computing tasks, are coded as 8471.50 and are thus likely not exempt from the tariffs, as stated on the company’s website.
Distinctions within these categories can sometimes be ambiguous. For example, in 2020, a request was made by an importer for clarification regarding the categorization of two Nvidia GPU models. Upon review, U.S. Customs and Border Protection determined that the GPUs fell under the 8473.30 category, which also is not exempt from tariffs.