Trump's 25% semiconductor tariffs — What does it mean? Which AI chips will be affected? Explained

Hours after US President Donald Trump imposed a 25% tariff on certain AI chips, a White House official said that the duty on these high-end semiconductors was a “phase one” action to protect the sector, according to a report by Reuters.

The US Commerce Department's action could be followed by other announcements depending on negotiations with other countries and companies, according to the report quoting a person familiar with the knowledge of the matter.

The US and Taiwan has already agreed to a long-sought trade pact that would lower tariffs on goods from the self-governed island to 15% and see Taiwanese semiconductor companies increase financing for American operations by $500 billion.

The official quoted by Reuters said Trump has previously threatened a 100% tariff on chips not made in the US as he seeks to build up semiconductor manufacturing.

What did Donald Trump announce?

In an order on Wednesday, Donald Trump imposed a a 25% tariff on certain AI chips under a new national security order released by the White House.

The proclamation comes after a nine-month probe under Section 232 of the Trade Expansion Act of 1962 and targets a number of high-end semiconductors.

“It’s not the highest level, but it’s a very good level. And China wants them, and other people want them, and we’re going to be making 25% of the sale of those chips, basically,” Trump told reporters on Wednesday during a signing ceremony.

The action is being seen as a broader effort by the US to make more semiconductors and AI chips.

He has also directed Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer to “pursue negotiation of agreements” on imports and to report back in 90 days, as per the proclamation.

Which AI chips and semiconductors will be affected?

The order signed by Donald Trump says that the government would collect the duty on certain semiconductor chips as they are brought to the US before final shipment to Chinese customers and other foreign markets.

Under the new rule, the Nvidia H200 AI processor and a similar semiconductor from AMD called the MI325X will get tariffed.

The 25% tariff applies to “a very narrow category of semiconductors that are an important element of my administration’s AI and technology policies,” as per the proclamation.

The White House said in a fact sheet that the tariffs will be narrowly focused and will not apply to chips and derivative devices imported for data centres in the US, startups, non-data center consumer applications, non-data center civil industrial applications and US public sector applications.

Why did Trump announce the latest tariffs?

The announcement comes amid a broader push by the Trump administration to boost technology manufacturing in the United States and make his country a leader in AI.

Trump has cited national security concerns Section 232 of the Trade Expansion Act of 1962 as the basis of the enactment of this new law.

The action comes as an incentive for US chipmakers to move away from other countries and manufacture AI semiconductors in the United States, decreasing reliance on countries like Taiwan for shipments of AI chips.