US Semiconductor Tariffs: Scope, Exemptions, and Impact

US President Donald Trump issued a proclamation introducing new trade restrictions on specific semiconductor-related imports, which took effect on January 15. This decision to impose tariffs resulted from the US Secretary of Commerce's conclusion that imports of semiconductors, semiconductor manufacturing equipment, and related products pose a threat to US national security.

The Scope and Impact Of Semiconductor Tariffs

The issued proclamation implements a strategy that combines negotiations with a targeted 25% ad valorem tariff on specific advanced computing chips and related derivative products defined in the proclamation’s Annex. Notably, the tariff is added to any other duties, fees, or charges unless otherwise specified. 

Additionally, affected products fall under certain Harmonized Tariff Schedule of the United States (HTSUS) codes but only cover logic integrated circuits or products containing them that meet precise technical thresholds for total processing performance and DRAM bandwidth. 

However, there are certain exemptions. If the products are imported for specific purposes that support the US technology supply chain, such as use in data centers, domestic repairs or replacements, research and development, use by startups, non-data center consumers, or civil industrial applications, the tariffs do not apply. 

As stated in the proclamation, the Commerce Department will monitor imports of in-scope products and equipment, and if necessary, recommend further measures. Also, by July 1, 2026, the Department will provide an update on the semiconductor market used in US data centers to assess whether adjustments to the tariff are warranted. 

It is important to note that tariffs are subject to change as negotiations progress. Therefore, while tariffs may be repealed, the proclamation gives the President the power to impose broader tariffs alongside a tariff-offset program designed to promote domestic semiconductor manufacturing.

Importers of semiconductors should evaluate their exposure to the products specified in the proclamation’s Annex and align their supply chains with the defined end-use exceptions. Given that tariff applications depend on the intended use of products, businesses need to establish documentation and certification procedures to substantiate exemptions, such as for data center operations or research and development. Since no drawback is allowed, importers should review sourcing, inventory, and contract pricing to account for the 25% tariff.

Conclusion

All companies in the semiconductor sector should monitor the 90-day negotiation period and its outcome. Additionally, businesses subject to tariffs should monitor the Federal Register for any notices that adjust HTSUS codes or end-use certification requirements. Without a doubt, all members of the semiconductor sector will eagerly anticipate the Commerce Department's review of semiconductors used in US data centers scheduled for July 1, as it will further dictate the use of tariffs.

Source: The White House