President Trump's administration is considering imposing tariffs on semiconductors, impacting the global tech supply chain. This follows a Section 232 investigation into semiconductors and their impact on national security. While Trump claims there were no tariff exceptions for electronics from China, his administration announced some temporary reprieves.
The article highlights the significant reliance of the US on China for tech manufacturing. Approximately 80% of iPhones and a large percentage of other electronic devices sold in the US are made in China. Companies like Nvidia and Apple are investing in US manufacturing, but complete decoupling from China will take time.
Trump's approach contrasts with the Biden administration's CHIPS and Science Act, which offered substantial incentives for domestic chip production. Trump seeks to overturn the CHIPS Act, preferring tariffs, despite research indicating the Act's greater effectiveness.
Tariffs would raise costs for US companies and consumers. China's dominance in mature-node semiconductor production poses a concern, impacting US competitiveness. Furthermore, the article discusses China's significant control over rare earth elements, which are crucial for many technologies, and China's use of export restrictions as a bargaining tool.
The article concludes that while Trump's tariffs may cause damage, China's leverage in the supply chain limits Trump's ability to inflict significant economic pain. Complete supply chain diversification is not possible in the short-term, and the long-term success of such efforts remains questionable.