Trump teases ‘approximately’ 100 percent tariff for imported semiconductors US president Donald Trump appears to have settled his semiconductor tariff strategy. In January Trump said he planned “25, 50, or even a 100 percent tax” on imported chips. In February he foreshadowed semiconductor tariffs would be “25 percent and higher, and it will go very substantially higher over the course of a year.” …
I agree, because I really can't see how that threat would work. Tariffs are levied on importers, not on manufacturers.
You can't "get back" money from someone who never owed it in the first place, unless you're willing to go full banana republic.
Which might be the case for Trump, but is, I have to hope, unlikely to be for any of his successors who will inherit this "strategy".
Funny, that was my exact thought as I was reading that part of the article. If that flaw is obvious to two random people as soon as they see it, it says a lot for this "plan".
Also, as soon as I read "Exemptions available for chipmakers who promise to build American fabs" my first thought was "Foxconn Wisconsin plant scam mark 2".
Alleged penalties for those who renege on such promises? Sure...
In reality, they'll let them get away with it quietly, again, because to do otherwise would be to draw attention to the failure of their hollow, puffed-up plan and the fact they couldn't really do anything about it
As others have said, they'll make showy but hollow pledges to appease Trump and give him the opportunity to look "good", but with enough wriggle room that they can stall and quietly get out of it later when Trump has moved on to the next thing or hope that his successor doesn't care as much.
It'll be distracting the dog with a bone or a child with a toy, nothing more.
I disagree - I'm pretty sure they will not fulfil any of the pledges
Most likely, some will, some won't.
One possible strategy. Announce a zillion dollar investment in (a) US plant(s). Send a few lawyers and suits off to talk to various states about incentives to build there. That'll take about a year. Maybe 18 months. Then announce you're going to build in West Virginia or whatever and are looking for a suitable location. Another year to 18 months. Buy some land conditional on approval of permits to build. Put together an outrageous plan and submit it. Permits denied. 3.5 years have passed, By then, the Great Leap Backward has floundered. Trump is out of office. The US economy is collapsing thanks to Trump's antics. You walk away. It'll cost you a bit, but not a lot. ISTR that Foxconn did something along that line in Wisconsin a few years ago -- perhaps not as cynically. but same result.
And if somehow, Trump doesn't crash the US economy, you can always submit a rational plan and build the damn plant if it makes business sense.
"I expect token pledges to get out of the tariffs that are then fulfilled to the absolute minimum level required to escape Trump's notice (and then slightly below that)."
Isnt this normal operating procedure? Government tries to demand something so the minimum is done to pass the check and government is disappointed that the businesses for some reason didnt feel altruistically compelled to go above and beyond what only the government demanded.
He'll carve out a deal for you where you can dodge the tariffs by kissing up to him in the White House and making promises to him you don't intend on keeping to distract him. If you're company measures revenue in the millions rather than billions - i.e. the kind of medium sized business most people work for - it is just too bad. You aren't important enough for him to hold a presser with, so you will get no relief.
TSMC in the US is already booked up, Intel is in disarray and can't even make chips for themselves, so you'll have to pay double for your chips from overseas and kill your profit margin. But don't worry, CEOs of those midsize companies will address that issue of tariff cost through a combination of layoffs and price increases - the Trump economy in a nutshell!
Isn't that more or less what's happening with most IT hardware suppliers?
They're keeping Trump away by some investments, but as their gear is 100% manufactured outside of the US, the only time they see a tariff is when the goods arrive in the US.
Translated: only US resellers and US customers take the hit.
>“If for some reason you say you're building and you don't build, then we go back and we add it up,” he said. “It accumulates and we charge you at a later date. You have to pay and that's a guarantee.”
Who's "you" here? Tariffs are not levied on manufacturers; they are levied on importers.
Either he doesn't understand what tariffs are and is therefore threatening to kill the importer, who was never required to build anything, and couldn't build anything except warehouses anyway, even if they wanted to.
Or he's threatening to ignore every national and international law, as well as common sense, and, out of the blue, at some point in the future, demand money from a manufacturer for not paying a tax that they never owed in the first place.
Sadly, both are plausible.
Also, it gets better. Since his threatened tariff is 100%, he wants to be able to present a bill to the manufacturer for the total value of all imports into the US, which would be insanely high. There would be zero reason to ever pay it, since it would instantly bankrupt a company.
"Since his threatened tariff is 100%, he wants to be able to present a bill to the manufacturer for the total value of all imports into the US"
Not quite like income tax.
A 100% tariff simply means the price of the product will be doubled. The importer pays the price asked to the foreign exporter and has to pay a tax to Trump on top of that of 100%. The consumer has to pay this doubled price.
That, and the fact that much of their low-end voter base is stupid and gullible enough not to realise that it's a tax in all but name and that they're the ones who will ultimately pay for it indirectly.
And, I suspect, if they did understand that- or had it pointed out to them- they'd use the fact that it *is* technically the importer who pays to rationalise why it won't cost *them* anything. Because they think that Trump expecting and effectively telling distributors to swallow the losses themselves- rather than passing them on to voters- means that they'll actually do so.
And because large companies who don't want to offend their customers *or* a vindictive government known for abusing its power kept their mouths shut about that reality and because a few of them made token gestures to pander to Trump or chose not to *immediately* jump in the short term- over what might be an equally short-term policy- they'll use that as evidence that this is what's happening.
How long does it take to build a fab? I'm sure you can spend a good couple of years just looking for the right site if you try hard enough. By then he'll be too busy trying to get around the constitution to be president for life. And if he fails him and his tariffs are gone or else there's a bigger problem with a little civil war to contend with.
A typical fab can- literally- cost several billion dollars.
You don't invest that sort of money without the years of projected stability needed to make your money back, and certainly not when your plans are dependent upon the whims of a capricious manchild who can- and will- change the major policies they're reliant upon overnight.
Trump doesn't actually care whether they get built or not. Keep in mind that he's a real estate man, all he cares about is that he (or people that are in his pocket) can sell these companies the land that their factories will theoretically sit on and directly profit from it that way. Given the opportunity, he'd probably use eminent domain to steal that land back from them and sell it to someone else.
I use Mouser and Digikey despite being in the UK as they are generally cheaper than the UK equivalent (RS and Farnell), since shipping costs from the US are free for orders above a certain value.
So, are the tariffs only for semiconductor manufacturers, or for any semiconductor imported ?
If it is for any imported semiconductor, then this policy will really mess up the US supply chain as a minimum.
Not bothered about ITAR as i do not purchase those specific products.
As an example, i purchased some TO-220 heatsinks from Mouser, and they are 10x (just about) less than the cost from Farnell - Mouser was £1.96 and Farnell £18.43. Anyway, Farnell is a US company now (AVNET).
Given how many morons in those industries were quick to cheer him forcing minorities out of the service without benefits and setting up internment camps on US soil, I say good riddance. At this point I'm already an bitter old man at 30, having watched my country spiral since that morning of September 11th 2001.
This reminds me of the time we had so many Americans leaving the US that the Swiss embassy in Bern started to charge a lot of money for an appointment to stop the drain. Which didn't help a bit..
Can't remember what that was about, must look it up some time.
But the aim of a 100% tariff is not so much to collect the tariff, but to stop trade. The idea being that the USA is such an important market that companies will do everything to get access.
But as the world economy is a lot bigger than the USA ($200T vs $40T), the World can survive a decoupling of the USA. The USA is not that trade minded anyway. Trade involves only 25% of USA GDP. The world average is over 60%. Current trade of the USA is ~$3T, global trade is ~$25T.
Note that the current surge of isolationism in the USA has been made possible by the fact that during Obama's presidency, fracking made the USA energy self-sufficient. Before that, the US had to be involved in world politics to protects its fossil energy (oil) imports. After that, this was not necessary anymore.
Loss of the US market is a big hit for the rest of the world, but not lethal. And it does not cover the fact that loss of certain imports can kill the US economy.
Many materials to produce, eg, semiconductors, have to be imported from countries the US tries to kill economically. Also, foreign holders of US debt can easily tank the dollar if they wanted to, making tariffs looking comical.
In the end, it is the US public that will have to cough up the tariffs anyway. Tariffs are simply a sales tax.
Look at the bright.side - the USA becomes the world's dumping ground for used electronics - much cheaper cost to import, so less tariffs for people to pay, especially when inflation and tariffs make importing new cost-prohibitive.
All those used phones, laptops, older video cards, TV s can now have a second life in the new 3rd world economy of the USA.
Ditto old cars. The new Cuba.
> In the end, it is the US public that will have to cough up the tariffs anyway. Tariffs are simply a sales tax.
Mostly-yes but kinda-no.
Suppose you buy an eyePhone. Are you paying $988 + $1600 tariffs? Of course not. You're paying $2500. Apple has already paid the $1200 tariffs (actual imported cost vs total percent on the whole product) when it imported the phone (or components used to make it).
There is "pass the cost on to the consumer," but it's the corporations paying the cost up-front, and then *hoping* to recoup: 1. that Donald won't remove tariffs next week, meaning you can't increase the cost of the item, 2. hoping that you can actually sell for that price in this market. Remember the jab about tariffs being included on a receipt, and then something-something cannot itemize taxes separately on the receipt. Heh.
It's still a colossally dumb move on the part of market manipulation, but it *is* a gun that you can point at a manufacturer: manufacture your product in the US, or we'll make it so you can't sell the product in the us - at all.
>> Suppose you buy an eyePhone. Are you paying $988 + $1600 tariffs? Of course not. You're paying $2500. Apple has already paid the $1200 tariffs (actual imported cost vs total percent on the whole product) when it imported the phone (or components used to make it).
And example, because Apple is both the importer and the seller.
And of course people in other countries aren't paying any Trump Tax. Same as the rest of the world isn't paying a Trump Tax for imports from China, Brazil, The EU, Mexico, Canada, etc.
But the US is now a net importer of food, and has been since 2020. And that food is going to be taxed by Trump. There's already a coffee shortage driving up prices- wait until his latest 50% tariff on Brazil kicks in.
And if Trump exempts Brazilian coffee, Brazil can slap a 50% export tax on shipments to the US.
Note that the current surge of isolationism in the USA has been made possible by the fact that during Obama's presidency, fracking made the USA energy self-sufficient. Before that, the US had to be involved in world politics to protects its fossil energy (oil) imports. After that, this was not necessary anymore.
Oh yes it is. Oil and energy sales are just the visible part of what the US has been doing for decades: forcing its currency to be used for international trade so it could do pretty much what it wanted like running up a frankly idiotic deficit. And it's exactly that deficit that's going to bite them savagely in the hind quarters when the world, now being forced by Trump, finally starts to isolate itself from the US.
I can see China as the new emerging force, ironically exactly because of energy - they provide the resources for green energy such as solar cells, magnets, battery storage and they hold pretty much all the patents for running Thorium reactors because they invested the billions in development that the US didn't (the US wasn't interested because a Thorium reactor doesn't produce the fun plutonium you can make nuclear weapons with). They also hold a lot of the ore to extract Thorium from but that's not exactly rare, if you pardon the pun (Thorium tends to be a byproduct of rare earth mining). In other words, they'll soon be able to commercialise producing CO2-free electricity at a fraction of the current cost, and you can bet they won't sell any of that in dollars, not with their own currency also recognised as a reserve currency by the World Bank (which they managed a while back - the joy of long term planning).
That is the real risk to the US, and as far as I can tell, Trump is aggressively pushing the US towards that exact scenario. Why, I don't know but it sure isn't to the benefit of the morons who voted for him.
I'm glad my kids got a few years of Mandarin at school - they're going to need it.
I'll price the component [NE555:)] at USD0.00 landed but the documentation (optional) and the licence to use (mandatory) will set you back USD10.00. The tariff on the component is 100% of 0.00 while the electronic doco and licence are services.
About as daft as anything currently emanating from Trumpty-Dumpty's suppurating brain.
If foreign manufacturers don't play ball, the US "would go back and we add it up...It accumulates and we charge you at a later date. You have to pay and that's a guarantee.”
How would this work in practice? If I understand it correctly, let's say Chipmaker X doesn't meet its US manufacturing requirements by say, 2030, does the US then go through all the imports and levy tariffs on all US customers who have completed orders in the last 4 years?
Chipmaker X has already fulfilled those orders and booked the revenue, so there would be no immediate hit on it. I suppose US customers could add a contractual clause today requiring Chipmaker X to indemnity them for any retrospective tariffs? However, the likes of TSMC would never agree as equivalent chips aren't available elsewhere?
Ah well, at least chips are not an essential component of pretty much every device used by consumers and industry these days. I'm sure it will all work out fine.
Foreign owned ones, that is. Starting with Scotland. A 200% tax on every bit of money going abroad. And an ownership tax, of course. 10% of asset value seems fair - and that value is, of course, independently verified, with a 200% tax on any delta between declared value and actual.
I mean, if he's going to arbitrarily charge for things with no regards for their actual legality there should be no objections against being subjected to the same, no?
No idea, I stopped listening to this moron a long time ago.
One of the things that annoyed me was simply the whining tone of his voice and associated intonation. It's hard to listen to once you notice it, so I stopped. Also saves time - I don't know why reporters have to verbatim repeat all his BS before commenting as it gives it that much more airtime, so I fast forward through those parts.
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