There’s been a lot of confusion over tariffs on Chinese semiconductors and electronics the last few days.
First came word that a lot of semiconductors and electronics will be exempt from the tariffs.
The Trump administration released new guidance late Friday night on its tariff on China, exempting electronic devices such as smartphones and laptops.
The guidance, posted by U.S. Customs and Border Protection, which oversees collecting taxes on imports, could relieve some anxiety among consumers and tech giants like Apple and Microsoft, which manufacture many of their products in China, The Wall Street Journal reported. Around 20 electronic products — which also include memory cards and machines used to make flatscreens and tablets — will now be exempted from Trump’s massive “reciprocal” tariff on China. The exemption comes after the president increased the tariff on China in recent days in response to China’s retaliatory tariff on U.S. goods.
Stephen Miller, the White House deputy chief of staff for policy and Homeland Security adviser, wrote on X, “These products are subject to the tariff under the original IEEPA [International Emergency Economic Powers Act] on China of 20 percent.” The IEEPA tariff was the first one Trump imposed on China after taking office in January. The tariff was levied on China, along with Canada and Mexico, in an attempt to “hold” the countries “to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”
The Trump administration has suggested that the tariff on China will encourage companies, including Big Tech companies, to manufacture their products on U.S. soil, arguing that the move would be better for the economy and national security.
“President Trump has made it clear America cannot rely on China to manufacture critical technologies such as semiconductors, chips, smartphones, and laptops,” Press Secretary Karoline Leavitt said on Saturday, according to the Wall Street Journal. She added, “Companies are hustling to onshore their manufacturing in the United States as soon as possible.”
(Apple, meanwhile, has already made plans to avoid teriffs on Chinese electronics by moving production to India and flying planeloads of iPhones into the U.S. ahead of the tariff deadline.)
Next came word that the pause in semiconductor tariffs will only be a month or two.
Commerce Secretary Howard Lutnick said Sunday that the administration’s decision Friday night to exempt a range of electronic devices from tariffs implemented earlier this month was only a temporary reprieve, with the secretary announcing that those items would be subject to “semiconductor tariffs” that will likely come in “a month or two.”
“All those products are going to come under semiconductors, and they’re going to have a special focus type of tariff to make sure that those products get reshored. We need to have semiconductors, we need to have chips, and we need to have flat panels* — we need to have these things made in America. We can’t be reliant on Southeast Asia for all of the things that operate for us,” Lutnick told “This Week” co-anchor Jonathan Karl.
He continued, “So what [President Donald Trump’s] doing is he’s saying they’re exempt from the reciprocal tariffs, but they’re included in the semiconductor tariffs, which are coming in probably a month or two. So these are coming soon.”
With all respect to President Trump and Secretary Lutnick, you can’t set up a new fab to manufacture semiconductors in America in two months. In fact, you’d be really hard-pressed to do it in two years. It usually takes a fab about three years to get up and running. Bosch took three years to get their 65nm fab in Dresden up and running, and Samsung broke ground on their Taylor fab in 2022 and it hasn’t entered production yet.
Setting up a semiconductor fabrication plant is much more difficult and time-consuming than setting up just about any other factory.
As I’ve mentioned before, you can’t just take an existing building and turn it into a fab, it has to be specially built from the ground up with exacting standards for cleanroom air filtering, concrete slab level uniformity, etc. You need extremely exacting air purity handling equipment, as well as a system for running de-ionized water throughout the plant. Then you need to purchase, install, bring up and qualify all the hundreds of pieces of semiconductor equipment necessary to run a modern fab. And 2-3 years is probably the lead time to get an ASML EUV stepper, if you’re going to be building a cutting edge fab. (If the goal is to reshore the semiconductor industry, then you probably need to build a lot of less-demanding fabs as well.)
I’m in favor of the Trump Administration using tariffs to bring other countries to the negotiating table to eliminate their tariffs on American goods, and for kicking China out of the global free trade order for repeatedly breaking the rules and just being general asshats. But a two-month difference in tariff implementation dates isn’t going to change the timeline for opening new semiconductor fabrication plants in America.
*Flat panel display manufacturing uses some of the same semiconductor processes to make displays. The technology is less demanding overall, but the substrate sizes are considerably larger. Because the feature size is less demanding, I imagine bring-up and qualification is somewhat quicker, but I’ve never worked on a flat panel display machine, so I have no idea how the lead time varies to obtain and install that equipment.
Tags: Apple, Economics, Foreign Policy, Howard Lutnick, iPhone, Semiconductors, Stephen Miller (Trump advisor), tariffs, trade
“Setting up a semiconductor fabrication plant is much more difficult and time-consuming than setting up just about any other factory.”
Please be reasonable Lawrence. If we don’t achieve economic autarky in less than 60 days, it will result in illegal immigration and the uninterrupted flow of poisonous fentanyl and other drugs into our country.
It will produce doom, doom and DOOMZ-DAY doom, dammit. Make all the fabs!! It will be worth the wrenching economic dislocation just to save one suffering junkie in San Francisco. Never forget, these are ‘Merican junkies and if they willingly inject themselves with a fatal overdose, it results in their voting Democrat forever.
It will be do-o-o-m I tell ya!
AMD, Apple, and Nvidia chips are now being produced at TSMC’s new Arizona plant. Would they have been produced in Arizona without tariffs? How many other chip designs will be produced at TSMC Arizona as it ramps up?
Those chips aren’t being produced at TSMC’s fab because it’s not open yet.
TSMC first announced that fab back in May of 2020, well before the current round of tariffs but after considerable concerns having enough domestic fab capacity for cutting-edge chips in the U.S.
The five year timeline underlies my major point here, which is that building such fabs is quite time-consuming.
[…] ARE HARD: The Semiconductors Tariff Yo-yo. “You can’t just take an existing building and turn it into a fab, it has to be specially […]
I don’t think the goal is to somehow get new manufacturing of semiconductor devices happening in the US in 60-90 days, I think the goal is to (1) reset the global narrative on globalist “free” trade and the US’s status as whipping boy for extraction of wealth via unbalanced trade, (2) motivate public commitments of FUTURE manufacturing in the US, and (3) establish a clear track record of “if you play nice with us, we’ll play nice with you”. So, for example, Bosch and Samsung have been given 60-90 to come up with and commit to a plan to increase manufacturing in the US, not actually start fab’ing chips in the US. Trump threatens, then makes clear he’s willing to enact, extractive tariffs, pulls them back while back-channeling that permanent exemptions are in the cards for any company making a real commitment to bringing manufacturing to America, with the clear threat that at any time in the next 4 years that company seems to waver in it’s commitment, the extractive tariffs are back on the table. How does the saying go? Trump et al know that you can’t just start fab’ing semiconductors tomorrow in the US… but they also know that unless you Bosch’s and Samsung’s feet to the fire today, they’ll never even start making that possible.
It’s certainly true that building out brand new fabs is very difficult, costly and takes a lot of time. But of course that has already been somewhat achieved. Over the past few years TSMC has built out fabs in Arizona and Texas, and in fact both AMD and Nvidia are going to be producing chips from them.
https://www.zerohedge.com/technology/ready-start-production-amd-prepares-first-made-america-chip
Granted, these fabs are merely on the so called “N4” nodes (which most of the current chips are made on), rather than TSMC’s upcoming N3 and N2. This means that while they’ll be able to produce current gen semiconductors, they won’t be able to produce stuff on upcoming (meaning in a year or 2) nodes.
I’d love for Texas to have a TSMC, but we don’t have one. You’re probably thinking of the Samsung fab in Taylor, which hasn’t opened yet.
That’s quite possible, but my impression is that the 1-2 month pause was specifically aimed at Chinese chips and electronics, and I don’t see China building fabs in the U.S.
NVIDIA said [1]:
“NVIDIA Blackwell chips have started production at TSMC’s chip plants in Phoenix, Arizona.”
[1]
From the Instapundit link:
LP: “With all respect to President Trump and Secretary Lutnick, you can’t set up a new fab to manufacture semiconductors in America in two months.”
Interlocutor: “No [joke]? I’m pretty sure these guys know that. I’m pretty sure they have thought this out a lot more than the author of this article seems to have.”
The argument from ignorance fallacy, also known as appeal to ignorance, occurs when someone claims that a statement is true simply because it hasn’t been proven false.
Childlike faith in political leadership is sentimentally appealing but in this one case, at least, logically unsound.
Lawrence Person for the win…
AMD and NVIDIA Begin U.S. Chip Production at TSMC’s Arizona Fab
By Mithun Mohandas | Updated on 15-Apr-2025
AMD and NVIDIA Begin U.S. Chip Production at TSMC’s Arizona Fab
In a significant step toward reshoring advanced semiconductor manufacturing, both AMD and NVIDIA have begun production of their latest generation chips at Taiwan Semiconductor Manufacturing Company’s (TSMC) facility in Phoenix, Arizona…..”
While we wait to see the ultimate outcome brought about by the on again/off again Trump tariffs, there is an analytical tool that could be used to shape trade policy. The Edgeworth box microeconomic diagram demonstrates how to recognize allocative efficiency.
Unlike Peter Navarro’s untested, obscure and esoteric macroeconomic formula, the Edgeworth box has a lengthy academic pedigree.
https://maseconomics.com/the-edgeworth-box-understanding-resource-allocation-and-efficiency-in-microeconomics/
OK, if the news literally broke today, no, I hadn’t seen that.
Good to know.
“Trump threatens, then makes clear he’s willing to enact, extractive tariffs, pulls them back while back-channeling that permanent exemptions are in the cards for any company making a real commitment to bringing manufacturing to America, with the clear threat that at any time in the next 4 years that company seems to waver in it’s commitment, the extractive tariffs are back on the table.”
Are you suggesting this wantonly manipulative practice will engender the confidence necessary to attract foreign capital? Didn’t you see what happened when Trump abruptly changed the foreign trade rules?
Washington DC may be able to bully domestic producers because they have physical plants and contractual obligations. Foreign investors have no such constraints. Sometimes , the best bargaining strategy is to just walk away.
Even Warren Buffet is reluctant to invest in US companies. He has a very unfavorable view of Trump’s trade policies and will likely invest his cash holdings in Japanese stocks, instead.
“Berkshire Hathaway’s holdings of cash and equivalents — mainly U.S. Treasury bills — has hit a record $345 billion, according to the latest figures. That is nearly twice the level of a year ago, and now accounts for a staggering 53% of the company’s net assets.”
Warren Buffet is an avowed Democrat who endorsed Zero and Hillary. The Democrats make him a lot of money with their massive deficit spending.
Berkshire Hathaway has been dumping stocks since the middle of 2022, long before a Trump reelection was on anyone’s RADAR. Their biggest stock dumps were 2023 and 2024. They appear to be sitting tight this year.
So not only did Warren Buffett know it was time to divest himself of his Apple holdings , he also knew to do it before Trump took office and wrecked the stock market. Buffett must have been forewarned by those Russian psychics.
“Apple has underperformed the wider stock market, shedding 24.7 percent in the year-to-date ahead of Monday’s market open, according to Yahoo Finance. This compares to the S&P 500, which has fallen 13.7 percent.“
[…] few pieces of Nvidia-specific news have popped up on the semiconductor industry since Monday’s piece, so let’s do a quick […]