On January 14, US President Trump signed an executive order to officially impose a 25% ad valorem tariff on certain semiconductor products, effective January 15. The move, a core part of his administration’s AI and technology strategy, also paves the way for potential tariff measures on critical minerals in the future.
The tariff targets an extremely narrow category of semiconductors, specifically those imported into the US but not used for domestic AI applications before being re-exported—a practice known as "transshipment". Explicitly affected products include two AI chips: NVIDIA H200 and AMD MI325X. This formalizes Trump’s December announcement that NVIDIA would have to pay a 25% fee on H200 sales to China.
The news immediately impacted the market. After hours, NVIDIA’s stock dipped 0.20% and AMD’s fell 0.19%, reflecting short-term investor jitters. Notably, the policy includes flexible adjustments: the White House reserves the right to expand tariffs to more semiconductors with higher rates post-trade negotiations; meanwhile, enterprises increasing investments in US chip manufacturing or specific supply chain segments may qualify for tariff offsets to mitigate impacts.
Enforced under Section 232 of the Trade Expansion Act of 1962, the tariff cites "national security threats" as its core rationale. The US consumes a quarter of the world’s semiconductors but only produces 10% of its domestic demand, making over-reliance on overseas supply chains a major concern. Analysts note that even if the US Supreme Court rules against some tariffs in the future, industry-specific tariffs like Section 232 measures are likely unaffected, ensuring policy stability.
For critical minerals, the US opted to hold off on tariffs temporarily. Instead, it is negotiating with trade partners including France, Australia, South Korea and the UK to reduce dependence on resources like rare earths. White House data shows the US is 100% reliant on imports for 12 critical minerals and over 50% reliant for 29 others. China’s dominant position in this sector gives it leverage in negotiations, a key reason behind the US’s pragmatic approach of delaying mineral tariffs.
Henrietta Treyz, Managing Director of Economic Policy at Veda Partners, analyzed that linking chip sales to Section 232 investigations not only provides a legal basis for allowing H200 sales to China while collecting 25% revenue, but also reserves policy flexibility if the Supreme Court issues unfavorable rulings, enabling relevant departments to roll out new measures quickly.
ICgoodFind : The 25% chip tariff will reshape the trade landscape of targeted products. Short-term impacts are concentrated on specific models, while long-term developments hinge on tariff expansion risks and supply chain restructuring trends.
