President Trump announced broad tariffs of 10% on nearly all goods coming to the US from 185 countries, sending financial markets into a nosedive. Those hikes came alongside even stiffer reciprocal tariffs on goods from electronics-producing countries like Taiwan (32%), China (54%) and Vietnam (46%).
Markets reeled at the announcement on Thursday. The tech-heavy Nasdaq dropped more than 4%, with some tech all-stars including Nvidia down nearly 6%. Nvidia’s GPUs are manufactured by TSMC in Taiwan, where the new tariffs are now 32%, while the company’s AI products are assembled largely in Mexico, which had already been subject to a 25% tariff on many products exported to the US except some items under the US-Mexico-Canada agreement signed by Trump in his first term. (However, autos from Mexico and Canada are a different matter and are subject as of April 3 to 25% tariffs.)
Nvidia did not react directly to the market explosion from the newest tariff announcement, but CEO Jensen Huang at the GTC event in March had told analysts that future tariffs “will have little impact for us short term. Long term, we’re going to have manufacturing onshore.” He mentioned that TSMC is investing $100 billion more for fabs in Arizona.
Truist analyst William Stein told investors in a note on Thursday that Nvidia and other AI chipmakers may indeed see less impact from the tariffs because their AI customers “appear to be in a race to develop AI and specifically Artificial General Intelligence at [perhaps] any cost.”
Alternatively, Huang could have been referring to a longer timeline from the Trump administration for when semiconductors will specifically be subject to tariffs. It isn’t clear when chips will get new tariffs, although the White House recently said semiconductor tariffs are coming.
It might not matter much if there’s a specific chip tariff, however, because so many products that contain chips will be subject to 10% or higher tariffs. A White House fact sheet specifically excludes semiconductors and copper (used in creating circuits and other products) from reciprocal tariffs announced Wednesday.
Can tariffs bring manufacturing to the US anytime soon?
Huang’s insight fits into the central tenant of why the Trump administration is pushing tariffs so broadly: to bring manufacturing back to the US, including chip fabs. A central concern of many economists and experts with Trump’s reasoning is how long it will take to bring the jobs back, especially since globalism in the electronics trade has been built up over 50 years and trading partners are entrenched in selling and buying millions of diverse electronics components and products across an array of national borders.
If a big chipmaker announced intensions to build a new fab or expand a fab in the US, it would take up to four years to set it up.
“Even if the tariffs work to make companies move manufacturing to the US, it will still take time and during that time of several years, everything will cost more as chips coming to the US from around the world, especially Taiwan and China, will have their prices increased by tariffs. This will hurt,” said analyst Jack Gold of J. Gold Associates.
Electronics industry groups widely expect a semiconductor-specific tariff in coming weeks, but the tariffs just announced by President Trump will still affect cars, smartphones, home appliances and other products that rely on chips or chip boards and related electronics.
About half of the cost of a new car is due to the electronics inside, while virtually every appliance has chips inside, Gold noted. There are no LCD panels made in the US, making them potentially subject to tariffs.
“There is no chance that tariffs will, in the short term, make more electronics manufacturing come to the US,” Gold added. “But tariffs will raise the end price of the products that use them.”
There may be an exception to Gold’s prediction, because Trump, as a well-known deal maker, has stated that TSMC raised its $60 billion fab commitment to the US to $160 billion under threat of tariffs.
Trade groups are skeptical of tariffs and will watch the impact
Some electronics industry trade groups said they are still assessing what their members think of the new tariffs, but IPC was more strident in calling for a more comprehensive approach to domestic electronics growth than through the use of tariffs. The trade group represents 3,200 member companies in design, PCB manufacturing, electronics assembly and advanced packaging and test.
“We stand ready to work the administration on a bold strategy to rebuild this vital sector [of electronics design and production]. Tariffs will not achieve this goal,” IPC said in a statement. “A strong US electronics industry requires a comprehensive approach, one that pairs targeted investments and policies that will enhance mutually beneficial trade partnerships.”
In February, the Semiconductor Industry Association issued similar concerns. “We understand tariffs are a tool in the trade policy toolbox,” SIA said in a statement on Feb. 21. “If not approached carefully, tariffs could make it significantly more expensive to develop and produce Made-in-America semiconductors and the many critical technologies they enable, including artificial intelligence.”
The US International Trade Commission tallied more than $43 billion in computer imports from Mexico in 2024, with $34 billion from China, $19 billion from Taiwan, $14 billion from Vietnam and $1.5 billion from Thailand.