Trump says US will charge tariff of about 100% on semiconductor imports

WASHINGTON: The United States will impose a tariff of about 100 per cent on semiconductor chips imported from countries not producing in America or planning to do so, President Donald Trump said.

Trump told reporters in the Oval Office on Wednesday (Aug 6) the new tariff rate would apply to "all chips and semiconductors coming into the United States", but would not apply to companies that had made a commitment to manufacture in the United States or were in the process of doing so.

"If, for some reason, you say you're building and you don't build, then we go back and we add it up, it accumulates, and we charge you at a later date, you have to pay, and that's a guarantee," Trump added.

The comments were not a formal tariff announcement, and Trump offered no further specifics.

While is not clear how many chips, or from which country, would be impacted by the new levy, the plan to impose 100 per cent tariffs on semiconductors would be "devastating" for the Philippines, an industry leader said on Thursday.

The president of the Philippine semiconductor industry Dan Lachica said that around 70 per cent of the country's exports are semiconductors.

Taiwanese chipmaking giant TSMC "is exempt" from Trump's 100 per cent tariff on semiconductor chips, Taipei said on Thursday.

"Because Taiwan's main exporter is TSMC, which has factories in the United States, TSMC is exempt," National Development Council chief Liu Chin-ching told a briefing in parliament.

TSMC makes chips for most US companies, so its big customers such as Nvidia, are not likely to face increased tariff costs.

The AI chip giant has itself said it plans to invest hundreds of billions of dollars in US-made chips and electronics over the next four years. An Nvidia spokesperson declined to comment when asked about the 100 percent tariff on semiconductor chips coming into the US.

South Korea's top trade envoy Yeo Han-koo also said on Thursday that Samsung Electronics and SK Hynix will not be subject to the 100 per cent US tariffs on chips.

Yeo said on radio that among various countries, South Korea will face the most favourable US tariff rates on chips under the trade deal between Washington and Seoul. 

Samsung has invested in two chip fabrication plants in Austin and Taylor, Texas, while SK Hynix has announced plans to build an advanced chip packaging plant and research and development facility for AI products in Indiana. Both companies declined to comment on Trump's remarks.

POTENTIAL IMPACT ON SINGAPORE

In April, Singapore's Trade and Industry Minister Gan Kim Yong cautioned that additional tariffs on the semiconductor and pharmaceutical sectors - if imposed by the US - could strain the global economy further.

"Taken together, these developments have caused significant uncertainty and downside risks to the global economy. And we must be prepared for more shocks and surprises and challenges going ahead," he said during a press conference by the Singapore Economic Resilience Taskforce.

Noting that the Ministry of Trade and Industry had just lowered Singapore’s gross domestic product (GDP) growth forecast for 2025 to 0 per cent to 2 per cent, he added: "Given the potential downside risks, we cannot rule out the possibility of a recession for this year."

Previously, he had also spoken in parliament about the impact semiconductor tariffs could have on jobs and growth. 

In response to a parliamentary question, he said such tariffs are "something … of great concern" given how Singapore’s semiconductor exports to the US make up about 8.9 per cent of Singapore’s total goods exports to the US.

This is equivalent to 0.8 per cent of Singapore’s total goods exports to the world last year – an amount that is “not insignificant”, said Mr Gan.

Mr Gan currently leads the Singapore Economic Resilience Taskforce, which aims to help businesses and workers address immediate uncertainties arising from US tariffs, strengthen resilience and adapt to a new economic landscape.

Meanwhile, Malaysia has reached out to American counterparts seeking clarity on the steep tariffs on US imports of semiconductors and could risk losing a key market if its products become less competitive, its trade minister said on Thursday.

Trade and Industry Minister Tengku Zafrul Aziz told parliament that Malaysia, a key chipmaker, was advocating for its exporters to ensure that any changes to policy or exemption criteria can be negotiated earlier. 

"SURVIVAL OF THE BIGGEST"

"Large, cash-rich companies that can afford to build in America will be the ones to benefit the most. It’s survival of the biggest," said Brian Jacobsen, chief economist at investment advisory firm Annex Wealth Management.

Congress created a US$52.7 billion semiconductor manufacturing and research subsidy programme in 2022. The Commerce Department under President Joe Biden last year convinced all five leading-edge semiconductor firms to locate chip factories in the US as part of the programme.

The department said the US last year produced about 12 per cent of semiconductor chips globally, down from 40 per cent in 1990.

Any chip tariffs would likely target China, with whom Washington is still negotiating a trade deal.

"There's so much serious investment in the United States in chip production that much of the sector will be exempt," said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics.

Since chips made in China won't be exempt, chips made by SMIC or Huawei would not be either, Chorzempa said, noting that chips from these companies entering the US market were mostly incorporated into devices assembled in China.

"If these tariffs were applied without a component tariff, it might not make much difference," he said.

Chipmaking nations South Korea and Japan, as well as the European Union, have reached trade deals with the US, potentially giving them an advantage.

The EU said it agreed to a single 15 per cent tariff rate for the vast majority of EU exports, including cars, chips and pharmaceuticals. South Korea and Japan said separately that US agreed not to give them worse tariff rates than other countries on chips, suggesting a 15 per cent levy as well.