President Donald Trump implemented a new 25% tariff on “certain advanced computing chips,” as detailed in a White House fact sheet. This encompasses Nvidia’s H200 chip and AMD’s MI325X. Nonetheless, chips brought in to bolster the US technological supply chain would be exempt from these measures. The criteria necessary to qualify for the exemption remain ambiguous. The White House fact sheet indicated that the president may soon implement wider tariffs on imports of semiconductors and related products.
The action occurs in the context of Trump’s extensive initiative to enhance technology manufacturing domestically and establish the United States as a frontrunner in artificial intelligence. Nvidia, a key player in supplying chips essential for the operation of data centers that support AI services, has emerged as a focal point of the AI boom, consequently drawing CEO Jensen Huang into the sphere of influence surrounding Trump. In implementing the tariff, Trump referenced national security issues and Section 232 of the Trade Expansion Act of 1962, which empowers presidents to respond to such issues through tariffs on particular goods.
Trump previously stated that Nvidia would be allowed to sell its H200 chip in China, with the US receiving a 25% share of the proceeds. Nvidia expressed in an emailed statement its approval of Trump’s “decision to allow America’s chip industry to compete to support high paying jobs and manufacturing in America. Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America,” the statement read. AMD stated that it adheres “to all U.S. export control laws and policies.” Trump has previously addressed the topic of tariff exemptions as a means to encourage domestic construction. The president in August issued a warning of imposing 100% levies on chips and semiconductors, while indicating that companies pledging to establish domestic production would be exempt from this fee. Trump has positioned AI as a central element of his second term, executing several executive orders pertaining to the technology and unveiling an AI action plan aimed at reducing regulation and fostering the adoption and advancement of AI.
However, some, including Huang, have expressed criticism regarding stringent export controls to China in the past, arguing that such limitations have merely spurred innovation within China. This situation has positioned major semiconductor companies, particularly Nvidia, at the center of Trump’s trade conflicts with China. In August, Nvidia and AMD announced their intention to remit 15% of chip sales generated in China to the US government, although this arrangement appeared to pertain to previously released chips from both firms. Last February, Trump indicated his intention to implement 25% tariffs on chips by April. Nevertheless, it was not until several months later that he officially commenced an inquiry into chip imports, serving as a precursor to the implementation of Section 232 tariffs. These tariffs are distinct from those currently under scrutiny in a case before the Supreme Court.