The United States imposed a 25% tariff on imports of certain advanced semiconductors, a pivotal step in a deal endorsed by U.S. President Donald Trump that allows Nvidia to ship its Taiwan-made H200 AI processors to China.
Under an order signed by Trump on Wednesday, the government will collect the tariff on these chips when they enter the United States before their final shipment to Chinese customers and other foreign markets.
Nvidia relies on Taiwan Semiconductor Manufacturing Company (TSMC) to manufacture the chips it designs, including the H200, which was authorized for sale to China by a decision from Trump in December.
Trump told reporters on Wednesday during the signing ceremony: It's not the highest percentage, but it's a very good percentage. China wants it, others want it, and we'll practically make 25% of the value of those chips sold.
Negotiate agreements instead of fees
Currently, the president is postponing imposing tariffs on a wider range of foreign-made chips, following an investigation conducted under Section 232 of the Trade Expansion Act, which concluded that they harm U.S. national security.
Instead, Trump directed Commerce Secretary Howard Lutnick and U.S. Trade Representative Jameson Greer to seek to negotiate agreements on imports and to report back within 90 days, according to the proclamation he signed.
A White House bulletin stated that Trump may announce new tariffs and an accompanying compensation program to stimulate domestic manufacturing in the near future.
The announcement noted that the 25% fee applies to a very narrow category of semiconductors that are an important element of my administration’s policies related to artificial intelligence and technology.
This category includes Nvidia's H200 chips, as well as Advanced Micro Devices' MI325X, according to the bulletin. The decision also includes an exception for imported chips to support the development of the U.S. technology supply chain.
Washington amends export regulations
Trump signed the measure one day after the Commerce Department’s Bureau of Industry and Security relaxed its standards for obtaining H200 chip export licenses to China.
This additional tariff is a condition imposed by Trump in exchange for allowing Nvidia to sell in China. The United States still needs to take further steps before Nvidia can ship the chips, including approval from the Bureau of Industry and Security for export licenses. This process could take weeks or months, and it remains unclear when it will be completed.
A Taiwanese delegation heads to Washington for negotiations.
Generally, Taiwanese products are subject to a 20% tariff upon entering the United States, but semiconductors have been exempted pending a national security investigation by the Commerce Department into whether new tariffs should be imposed on the entire chip industry. Trump has not yet implemented these tariffs, as negotiations with Taiwan and major technology companies continue.
According to people familiar with the matter, top Taiwanese officials are heading to Washington on Wednesday for talks aimed at finalizing an agreement to reduce the overall tariff to 15% and expand TSMC's production facilities in the United States.
Trump's decision was a major victory for Nvidia, which had lobbied U.S. policymakers to ease export restrictions that had prevented it from selling artificial intelligence chips in the world's largest semiconductor market.
The company’s CEO, Jensen Huang, had established a close relationship with Trump, and used those connections to convince the president that the restrictions would only strengthen local Chinese giants, such as Huawei Technologies.
A shift away from the policy of pressuring China
This shift represents a departure from years of US policy that sought to limit Beijing’s access to advanced US technologies, and has drawn criticism from Democrats and national security hawks in Washington, who see the move as encouraging an adversary that is aggressively pursuing progress in the artificial intelligence race.
Trump had taken a hard line against Beijing at the beginning of his term, fulfilling a campaign promise to confront its economic practices. But after igniting a trade war by imposing high tariffs on Chinese goods, he eased his pressure campaign by reaching a truce with Chinese President Xi Jinping.
Trump also clarified that he has no objection to doing business with Beijing in sensitive areas, as long as the US government receives a financial share. He hinted that a similar arrangement regarding chip exports is being prepared for other companies, including Intel and AMD.
Trump wrote in a post dated December 8: “This policy will support American jobs, boost U.S. manufacturing, and benefit American taxpayers.”
