new york
CNN
–
President Donald Trump has been focusing on tariffs on “more than 25%” on all US-imported semiconductor chips, which is likely to be “very high in a year,” he told reporters Tuesday. Ta.
Unlike cars and medicines that Trump said would soon face at least 25% tariffs, tips aren’t something the average American buys themselves. However, these miniature components provide power to almost every electronics we use.
Medical devices, Wi-Fi routers, laptops, smartphones, cars, appliances, and LED bulbs are just some of the many examples of where chips were found. And these products often don’t need just one or two. For example, new cars include thousands of cars.
The height of the Covid-19 pandemic quickly followed the chip shortage as Americans tried to use stimulus checks on upgrades to technology (particularly laptops, monitors, and other essentials for remote work and learning). request.
But they want to bring their products to the market, but they turned to Taiwanese companies. Not only did Taiwan benefit from the proximity to the raw materials needed to produce chips, but it also has governments invested in the industry since the 1970s, leading to manufacturing that has led to virtually unparalleled technological advancements in other countries. We provide direct support to contractors.
In total, the US imported $139 billion worth of semiconductors and other electronic components last year, according to data from the Department of Commerce. Taiwan accounts for 27% of these imports, and is the source of chips and electronic components sent to the US. The value of chips and electronic cargo coming to the US from Taiwan has more than six times higher than $9.4 billion in 2019 to $36.9 billion in 2024.
Meanwhile, the US exported $70 billion worth of chips and electronic components worldwide last year.
Given how reliant the US is on Taiwanese chips, particularly on advanced chips needed for new electronics, a 25% tariff on chips could significantly increase the price of many products Americans buy. can.
Chips and Science Law, passed by Congress in 2022 with bipartisan support, has allocated $53 billion over the next five years to help the United States regain its major position in semiconductor chip manufacturing.
The investment and incentives offered to domestic chip producers are tripled by the US by 2032, according to a 2024 report published by the Semiconductor Industry Association, a trade organisation, and the Boston Consulting Group. It may help you to do so.
However, top chip manufacturers Taiwanese semiconductor manufacturers and some companies such as Intel, Micron and Samsung have moved more production to the US to enjoy US benefits. It comes from Taiwan.
According to a 2020 report published by the Non-Participation Congressional Research Service, national production alone accounts for more than 90% of the world’s advanced chip manufacturing capacity.
John Daresus, professor of electrical and computer engineering at the University of Illinois Urbana-Champaign, said that even if tariffs promote more domestic chip production, “there are very few electronic gatherings in the United States.”
Therefore, chips produced in the US must be shipped overseas to countries such as Taiwan, South Korea, China, Mexico, and other countries to be placed in completed electronic equipment purchased by Americans. This means that, given that Trump is preparing to enact “mutual tariffs” on other countries and already has a 10% tariff on all Chinese imports, the goods are still in charge. It means you could face it.
What’s more, it’s not something that can be built overnight. “The new chip factory will take at least two to three years to build,” said Rakesh Kumar, a professor of electrical and computer engineering at the University of Illinois, Urbana-Champaign University. Therefore, he added that using tariff threats to support the production of land chips has negligible effects in the short term regardless.
Still, Kumar said it would cost more to make chips in the US compared to Asian countries.
Conclusion: A 25% tariff on tips will almost certainly raise the price of tips in some way, which will raise the price of American electronics.
