No Tariffs Announced for Most Chips, Critical Minerals, Pending Negotiations

The White House in the late afternoon Jan. 14 said the tariffs would only apply to "advanced computing chips, such as the NVIDIA H200 and AMD MI325X." Semiconductors imported under Harmonized Tariff Schedule subheadings 8471.50, 8471.80 and 8473.30 that don't meet the parameters for advanced chips laid out in the annex still will need to be filed under new HTS subheading 9903.79.02, which carries no additional duty.

Carve outs for advanced chips exempt those used "in United States data centers, for repairs or replacements performed in the United States, for research and development in the United States involving these chips, for startups in the United States, for non-data center consumer applications in the United States, for use in non-data center civil industrial applications in the United States, for use in United States public sector applications, or for other uses that the Secretary determines contribute to the strengthening of the United States technology supply chain or domestic manufacturing capacity for derivatives of semiconductors."

The proclamation creates new HTS subheadings 9903.79.04 through 9903.79.09 for advanced chips that meet the parameters in the annex but are exempt from the tariffs because they are imported for those uses. New subheading 9903.79.01 applies the 25% percent tariff to advanced chips that don't qualify for an exception.

At a signing ceremony at the White House, the administration characterized the tariff as only applying to chips destined for customers outside the U.S. "For example, semiconductors that were transshipped through the United States to other foreign countries would be subject to that 25% tariff," an aide said at the ceremony.

Although the executive order doesn't specifically mention China, President Donald Trump said during the signing ceremony that the tariffs are meant to target chips sought by China.

"China wants them, and other people want them, and we're going to be making 25% on the sale of those chips, basically," Trump said Jan. 14. "I think it's a great deal."

Nvidia's H200 chips are manufactured by TSMC in Taiwan, and Nvidia has successfully lobbied the Trump administration in recent weeks to permit exports of H200 chips to China.

In a separate deal, Trump early last year announced plans to allow Nvidia to sell its previously restricted H20 chips to China -- which are less advanced than the H200 -- in exchange for the company giving the government a 15% cut of its sales revenue from those exported chips (see 2508220003). U.S. officials have scrambled to figure out how to implement the supposed revenue-sharing deal, with some analysts and lawmakers noting that the Export Control Reform Act bars charging fees for export licenses (see 2508220003 and 2508150034).

The proclamation says more actions could follow on other products if the administration is not satisfied by agreements negotiated with countries that manufacture chips or related products. It says the commerce secretary and U.S. trade representative will undertake negotiations with countries that produce chips and chipmaking equipment, and if the administration is not satisfied that agreements with those countries will mitigate the national security weakness "the [Commerce] Secretary recommended broader tariffs on semiconductors, at a rate of duty that is significant. The Secretary also recommended that this broader tariff be accompanied by a tariff offset program to enable companies investing in United States semiconductor production and certain parts of the United States semiconductor supply chain to obtain preferential tariff treatment."

Reports have said that Taiwanese chips could be spared because major chipmakers have promised to build more fabs in Arizona.

Those agreements must be concluded within 180 days, the proclamation says. However, it also says that the president should be briefed in 90 days on the progress of negotiations. The fact sheet said "in the near future, President Trump may impose broader tariffs on imports of semiconductors and their derivative products, as well as an accompanying tariff offset program to incentivize domestic manufacturing ... ."

No drawback will be allowed on these tariffs. CBP subsequently issued a CSMS message with guidance on the tariffs.

The proclamation says that the commerce secretary concluded "that semiconductors, semiconductor manufacturing equipment, and their derivative products are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States."

The proclamation notes that the U.S. consumes 25% of the world's chips, but only fabricates 10%. It also said insufficient domestic capacity to make "advanced lithography and etching tools" is a national security risk.

The semiconductor Section 232 proclamation was one of two 232 proclamations signed Jan. 14.

A proclamation stemming from the Section 232 investigation on critical minerals didn't result in any tariffs, but the proclamation left the door open to imposing tariffs on critical minerals "if satisfactory agreements are not reached in a timely manner."

The proclamation noted that in 2024, the U.S. was 100% import-reliant for 12 critical minerals, and at least 50% import-reliant for another 29 critical minerals. "Even where the United States has domestic mining capacity, such as for cobalt, nickel, and rare earth elements, the United States lacks the domestic processing capacity to avoid downstream net-import reliance," it said. "In fact, although the United States is the second-largest producer of mined, unprocessed rare earth oxides in the world, the United States’ limited processing capacity still requires rare earth oxides to be exported for further refining and processing before being reimported for domestic use."

The proclamation directs the commerce secretary and the U.S. trade representative to jointly negotiate agreements to secure adequate critical mineral supplies. "Depending on the outcome of such negotiations, I may consider alternative remedies in the future, including minimum import prices for specific types of critical minerals," he wrote.

The president will get an update within 180 days on those negotiations. "In negotiating, the Secretary and the Trade Representative should consider price floors for trade in critical minerals and other trade-restricting measures," the proclamation said.