Industry insiders: Trump's tariffs are unlikely to drive a large-scale return of chip manufacturing to the United States
Analysts believe that Trump's plan to impose a 100% tariff on imported chips is unlikely to prompt a large-scale return of the chip manufacturing industry to the United States. Although companies like Taiwan Semiconductor are investing in building factories in the U.S., high production costs and exemptions for existing projects will weaken the motivation for expansion. The tariffs will have a greater impact on electronic companies that rely on imported components, and the main driving force for future U.S. chip investments will still come from subsidies and tax incentives under the CHIPS and Science Act, rather than tariff policies
According to reports, analysts say that U.S. President Trump’s proposal to impose approximately 100% tariffs on all chips entering the United States, while exempting companies that produce chips in the U.S., is unlikely to drive a large-scale return of chip manufacturing to the U.S.
On one hand, industry giants like Taiwan Semiconductor (TSM.US) have already invested billions of dollars in building factories in the U.S., partly due to earlier government subsidies. These related projects will qualify for exemptions, thereby reducing the incentive for these companies to further expand production.
On the other hand, high production costs remain a significant barrier. For example, Taiwan Semiconductor estimates that its gross margin for U.S. operations will decline by 2-3 percentage points, and the chips produced will be older generation products compared to those from its Taiwan factories.
Experts point out that these tariffs may have a greater impact on electronics companies that rely on imported components. For instance, Apple (AAPL.US) has avoided additional costs by committing to invest $600 billion in the U.S., most of which is unrelated to chip manufacturing.
Although tariffs may promote broader domestic manufacturing, industry observers believe that the driving force behind U.S. chip investment will still come more from subsidies, tax incentives, supply chain resilience, and geopolitical considerations under the Chips Act, rather than from the tariff policy itself
