‘For national & economic security’: Trump admin mulls chip-based tariffs on foreign electronics, says report – what it means – The Times of India

The Donald Trump-led US administration is considering a plan to impose tariffs on imported electronic devices depending on the number of chips in each one of them, Reuters reported, citing three sourcesUnder the proposal, the US commerce department would calculate tariffs as a percentage of the product’s estimated chip value, in a move designed to push manufacturers to shift production to America.

“America cannot be reliant on foreign imports for the semiconductor products that are essential for our national and economic security,” White House spokesperson Kush Desai told Reuters, regarding the matter.“The Trump administration is implementing a nuanced, multi-faceted approach to reshoring critical manufacturing back to the United States with tariffs, tax cuts, deregulation, and energy abundance,” Desai added.Uncertainty remains about the scope of products that would be affected, tariff rates, and possible exemptions. The commerce department was weighing a 25% rate on chip content, and 15% for electronics from Japan and the EU, though figures were still preliminary, a source told the agency.

What will be the impact if tariff gets imposed?

If implemented, the policy would apply to a broad range of consumer goods, from toothbrushes to laptops, potentially raising costs for US households. Economists warned it could also worsen inflation. According to Michael Strain, an economist with the conservative American Enterprise Institute, the move would push up consumer prices “at a time when the US has an inflationary problem, with inflation clearly above the Fed’s target and accelerating.”He added that even domestically produced goods could get costlier due to higher tariffs on imported inputs.Trump has already rolled out sweeping tariffs this year, including 100% duties on branded drugs and 25% on heavy-duty trucks. Earlier in April, his administration launched probes into pharmaceuticals and semiconductors, calling foreign reliance a national security threat.A potential exemption linked to investments in US manufacturing, dollar-for-dollar credits only if a company shifts half its production to America, has been discussed but not finalised. Meanwhile, earlier proposals to exempt chipmaking tools faced pushback from the White House, with sources saying Trump dislikes carve-outs. Taiwan Semiconductor Manufacturing Co. (TSMC) and South Korea’s Samsung Electronics, the world’s biggest non-US chipmakers, could be among the hardest hit.