Some relief, some worry – how did the world react to Trump’s new chip tariffs?

When US President Donald Trump announced Washington would be imposing a 100 per cent tariff on semiconductor and chip imports last week, it sent shock waves through countries with strong or emergent manufacturing clusters – but some markets responded with relief.

Here, we attempt to provide more context for what this tariff could entail and examine its potential impact across different regions.

What did Trump say, and how did markets react?

Trump broached the subject during Apple CEO Tim Cook’s August 7 visit to the White House, where the president also unveiled a US$600 billion commitment from the tech company over the next four years to expand its domestic manufacturing footprint.

While making the tariff threat, Trump added a major caveat: “If you’ve made a commitment to build [in the US] or if you’re in the process of building [in the US], there’s no tariff … [but] if you say you’ve committed but don’t build, we’ll add up the charges.”

Despite the threat of triple-digit tariffs on the critical technological product, the market’s focus has been on those exemptions. With Trump’s statement, the uncertainty over what form semiconductor tariffs would take has been lifted – at least temporarily. While details are limited so far, the move comports with Trump’s strategy to encourage high-end companies to establish manufacturing facilities in the US.

Currently, the US Bureau of Industry and Security is conducting an investigation under Section 232 of the 1962 Trade Expansion Act to determine how the import of semiconductors and the equipment to manufacture them relates to national security. The probe was initiated on April 1 by the Secretary of Commerce.

South China Morning Post