The US government’s push to boost domestic production of computer chips and semiconductors, driven by the CHIPS and Science Act, may face significant challenges due to President Trump’s plans to impose tariffs on foreign chip imports. The law aims to encourage companies like TSMC to build chip manufacturing facilities in the US, but Trump has proposed a 25-50% tariff on imported chips.
Economic experts warn that such tariffs could slow or even harm the administration’s goal of maintaining a competitive edge in artificial intelligence research. “The shortage of chips has been a bottleneck for AI advancement,” said Saikat Chaudhuri, an expert at U.C. Berkeley’s Haas School of Business. “We need chip production to continue.”
Under the CHIPS Act, $30 billion was allocated to support 23 projects that would add 115,000 manufacturing and construction jobs in 15 states. The law also promised tens of billions of dollars to reduce reliance on Asian suppliers, which Washington sees as a security weakness.
However, Trump’s tariffs could raise prices for consumers who use chips in smartphones, gaming devices, smart fridges, and cars. “For consumers, it’s going to be rather painful,” Chaudhuri said. Tech giants like Nvidia may also feel the pain, despite their high margins.
Brett House, a professor at Columbia Business School, warned that broadly based tariffs would have a chilling effect on new investments in the US AI sector. “Shutting down openness to global markets and immigration has never been a recipe for American success,” he said.
The administration’s goal of maintaining a competitive edge in AI research may be compromised by Trump’s plans, which could reduce the capacity to create a domestic chip building sector.
Source: https://apnews.com/article/trump-semiconductors-chips-act-3592f1ed8b8cd4f2145cfa8a4985046c