The Trump administration is planning to expand tariffs on semiconductor products. According to Politico, that could further worsen the chip shortage already affecting US companies. US Commerce Secretary Howard Lutnick reportedly favors a model that ties tariff exemptions directly to commitments to invest in chip manufacturing in the US.
Only a fixed quota tariff-free
Under this model, only a fixed quantity of chips would be allowed to be imported tariff-free. Critics warn this could widen the gap between tariff-free supply and companies' actual needs. Tech companies are reportedly already running an intense lobbying campaign to get the administration to soften the tariffs and secure exemptions, warning that the tariffs could slow the multi-billion-dollar buildout of data centers.
While exemptions could still be secured under the tariff rules from January 2026, government officials are now signaling, according to Politico, that such exemptions could be scrapped going forward to increase pressure on domestic production. That puts the goal of rebuilding US chip infrastructure at odds with the ambition of winning the global AI race.
Years away from domestic manufacturing capacity
US industry representatives stress that they support domestic production in principle, but that advanced chip fabs cost billions and take years, if not decades, to build. Until that capacity exists, the US economy remains heavily dependent on Asian suppliers in Malaysia, South Korea, and Taiwan, with Taiwan alone producing more than 90 percent of the most advanced semiconductors. Building up domestic US production is estimated to take more than five years. Even TSMC's historic 265 billion dollar investment in Arizona will, once complete, shift only about 30 percent of the company's most advanced capacity to the US.
While tariff supporters argue that untangling supply chains reduces national security risks, economists warn of the economic fallout. Higher tariffs don't create skilled workers, speed up permitting, or expand existing infrastructure, in the short term they're more likely to worsen the very shortage they're meant to fix in the long run.