Trump Administration Considers Semiconductor Tariffs; tech industry warns of AI failure

The Trump administration is considering a new round of blanket tariffs on semiconductors, a move that could extend beyond chips to products including laptops, game consoles and data center servers, POLITICO reported, citing eight people familiar with the discussions.

The proposed tariffs are being considered despite warnings from technology companies that higher costs and stricter access to advanced chips could undermine US ambitions to dominate the global artificial intelligence race.

Tariffs could hit laptops, game consoles and servers

According to POLITICO, one proposal under consideration would greatly expand the number of technology products subject to tariffs. Rather than targeting only semiconductors, the duties could also cover products that contain chips, including laptops, game consoles and servers used in data centers.

Commerce Secretary Howard Lutnick supports a structure that would link tariff relief for foreign companies to investment in U.S. semiconductor manufacturing, four people familiar with the discussions told reporters.

The administration is also considering phasing in the tariffs, although the proposal remains unchanged and could undergo significant changes in the coming weeks or months.

The tech industry warns of the impact of AI

The potential tariffs have worried the U.S. technology industry, which is already struggling with a shortage of high-end semiconductors as demand grows due to the rapid construction of AI data centers.

Technology companies are broadly supportive of President Donald Trump’s push to expand U.S. semiconductor manufacturing. But industry officials say advanced chip factories require billions of dollars and can take years to build.

Until domestic capacity expands, US companies will remain heavily dependent on imported chips from Asian suppliers, including Malaysia, South Korea and Taiwan. Taiwan alone reportedly produces more than 90% of the world’s most advanced semiconductors.

Tariffs could conflict with Trump’s AI ambitions

The debate reveals a potential conflict between two of the Trump administration’s top priorities: bringing semiconductor manufacturing back to the U.S. and winning the global AI race.

POLITICO reported that tech companies fear the tariffs could raise the cost of imported chips needed to power the artificial intelligence boom and make it harder for U.S. companies to get enough supplies.

The industry warned that the measures could eventually force some companies to delay or cancel planned data center projects.

White House defends tariff strategy

The White House defended the government’s policy on semiconductors.

“Reviving semiconductor manufacturing is a top priority for President Trump,” White House spokesman Kush Desai said.

Desai said the Trump administration’s policies have already secured hundreds of billions of dollars in investment in the semiconductor sector. He added that the administration remains focused on attracting more investment, providing economic assistance and protecting US national security.

Tech companies begin lobbying push

Technology companies and industry lobbyists have stepped up efforts to persuade the administration to reduce the proposed tariffs, POLITICO reported.

The companies want the new tariffs to be more similar to tariffs announced earlier this year, which included broad exemptions for data centers and other domestic uses.

Tech officials and lobbyists have increasingly met with Lutnick and other senior Commerce Department officials, including Under Secretary Jeffrey Kessler, who heads the Office of Industry and Security, according to people cited by the media outlet.

AI spending raises industry concerns

Lobbyists say the tariffs could slow the expansion of US data centers by making it harder for tech companies to secure the huge volumes of advanced semiconductors needed for AI.

The concerns come as major U.S. tech companies begin spending on AI at record levels, investing hundreds of billions of dollars in major data center projects and advanced chips.

One technology official from a major industry group said the proposal could seriously undermine America’s efforts to establish a leadership position in artificial intelligence, describing it as “a loser on the starting line.”

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