U.S. Could Impose 100% Semiconductor Tariff If Chips Are Not “Made in America”

The U.S. government is considering imposing massive tariffs on semiconductor products unless manufacturers can match those volumes with chips produced in the United States. Under the current draft, companies that do not match foreign-sourced chip volumes with domestic output over time could face tariffs that, in some versions, reach 100%. The idea is an act of forceful action to speed up onshore capacity and reduce strategic dependence on overseas foundries, but they also admit that the plan faces serious practical hurdles. The core concept is simple to draft on paper, but hard to implement. For every unit brought into the U.S. from an overseas plant, such as TSMC in Taiwan and Samsung in South Korea, a corresponding unit would need to be produced domestically within a specified timeframe, or tariffs would be applied. This means that for every batch of chips NVIDIA, AMD, Intel, or Apple produce overseas, the same chip would need to be produced in the U.S.

Counting and comparing chip “units” is extremely complicated. Every semiconductor design differs wildly by complexity, cost, and function, and the typical semiconductor supply chain moves wafers, packages, and finished devices across several countries before a product reaches consumers. Even TSMC, the very maker of the chip, sometimes has a hard time confirming if the designs it makes are on the U.S. sanctions list. Like it experienced with Huawei, TSMC couldn’t determine that a third-party shell company was ordering Ascend accelerator IP on behalf of Huawei—which sits on the U.S. blacklist—even with advanced detection tools. Officials are reportedly considering transitional credits and carve-outs for companies that commit to building U.S. fabs, which would allow them to import while new plants come online. Even with those credits, a question arises about how to compare a million small mobile processors against a million high-performance data center accelerators.

Enforcing tariffs would require tight coordination among chip designers, contract manufacturers, electronics assemblers, and customs authorities. Companies that send silicon overseas for assembly and then re-import devices would have to trace the origin of every integrated circuit inside complex products, a task that would add compliance costs and could slow procurement, especially for higher-end parts like AI accelerators. Smaller suppliers and niche component makers could be hit hardest if the rules focus only on raw volume rather than product value or technical capability. On the other hand, firms already expanding U.S. manufacturing would stand to gain, as customers look to avoid increasing duties.

The ultimate game plan for this tariff proposal would be to create manufacturing jobs at home and to reduce what officials view as a national security risk from concentrated overseas production. However, it could also risk breaking global supply chains: buyers might stockpile, redesign products to use fewer foreign parts, or shift sourcing strategies, any of which could spark short-term volatility for processors, memory, and specialty chips and invite legal and diplomatic challenges from trading partners. For now, the idea remains under discussion, and no final decision has been announced.