As former President Donald Trump continues to push for tariffs on semiconductor imports, tech stocks have wavered, with companies like NVIDIA, TSMC, and AMD reacting to the uncertainty. However, industry insiders suggest that these tariffs are more of a short-term disruption than a fundamental shift for AI and semiconductor firms.
Short-Term Reactions, Long-Term Stability
Trump’s proposed 25% tariff on semiconductors, which could take effect as early as April, aims to encourage domestic AI-related manufacturing. In the meantime, companies are working to minimize costs, with some expediting shipments before tariffs kick in and others negotiating cost-sharing deals with suppliers.
Historically, tariffs have led to higher consumer prices, and experts predict that this round could increase costs for electronics, from gaming devices to smart appliances. However, AI product pricing—such as subscriptions to ChatGPT—may not follow a straightforward upward trajectory due to ongoing improvements in AI efficiency, which continuously drive down operational costs.
“The demand for AI is so strong that many companies can absorb a percentage change in profit without much disruption,” says Scott Almassy, semiconductor lead at PwC.
The Taiwan Semiconductor Factor
Taiwan Semiconductor Manufacturing Co. (TSMC), a key player in global chip production, is central to the U.S. semiconductor debate. Trump has accused Taiwan of “taking our chip business away” and has signaled that he wants more of its production moved to the U.S.
Biden’s administration has taken a different approach, offering incentives through the CHIPS Act, including $6.6 billion to help TSMC expand in Arizona. However, delays have plagued the project due to regulatory hurdles and a shortage of local expertise.
Despite these efforts, Taiwanese chipmakers remain skeptical about shifting production. Taiwan’s economy minister recently dismissed the tariff’s impact, stating that the country’s technological leadership remains irreplaceable.
Almassy agrees, noting that leading-edge AI chips still rely on Taiwan’s expertise. “There is no alternative at the moment,” he says. “Taiwanese companies will likely pass increased costs to their direct customers, who will then decide how to manage it.”
Impact on U.S. AI Leadership
The tariffs could have a marginal effect on America’s AI race against China, as U.S. firms like NVIDIA and OpenAI may face increased costs while competitors in Europe or Japan buy chips tariff-free.
“If you’re the leader and your resources cost more, you have further to fall,” Almassy notes.
However, industry analysts point out that supply chain diversification efforts have been underway for years, with or without tariffs, to prevent pandemic-era shortages.
For now, the AI industry is treating Trump’s tariff threats as another variable in an already dynamic market—one that is unlikely to alter its long-term trajectory.
