Chipmakers now face 100% trade tariffs if they aren't willing to invest in the US

The Trump administration has made it clear that it wants chip manufacturers to invest heavily within the United States, and to convince them, the administration is planning to implement "a very substantial tariff, not that high, but fairly substantial."

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To incentivize chip manufacturers who want to sell chips to customers within the United States, the Trump administration says it will be introducing trade tariffs, or increased taxes on chips from outside countries, essentially forcing companies to decide whether they want to eat into their profits or invest in the US by constructing their own chip manufacturing line on US soil.

The Trump administration is exploring these tariffs under Section 232, with the President saying companies that aren't willing to invest in the US could be hit with tariffs as high as 100%. However, it isn't all doom and gloom for chip companies outside of the US, as there is a list of companies that will be exempt from the tariffs. Notably, those companies include TSMC, Samsung, SK Hynix, Micron, and many others that are crucial parts of the supply chain.

"Yeah, I have discussed it with the people here. Chips and semiconductors - we will be putting tariffs on companies that aren't coming in. We will be putting a tariff very shortly. We will be putting a very substantial tariff, not that high, but fairly substantial tariff with the understanding that if they come into the country, if they are coming in, building, planning to come in, there will not be a tariff," said US President Donald Trump

It remains to be seen whether tariffs will be effective in bringing chip manufacturing to the United States, but what we have seen immediately is that a few companies will pour hundreds of billions of dollars into the US to avoid tariffs, Apple being one of them, with a $600 billion pledge.