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Donald Trump has announced new tariffs on Nvidia and AMD as part of a novel scheme to enact a deal the US president cut with the tech giants to take a 25 per cent cut on sales of their AI processors to China.
In December, the White House announced an agreement that would allow Nvidia to start shipping its H200 chips to China, reversing a policy that prohibited the export of advanced AI hardware — but demanded a 25 per cent cut of the sales.
The new US tariffs on certain chips, announced on Wednesday, were designed to implement these payments being made to the US government and protect the unusual arrangement from legal challenges, according to several industry executives.
The move enacts the latest element of Donald Trump’s transactional trade policy and allows the US government to profit from a change to its export controls.
“We’re going to be making 25 per cent on the sale of those chips, basically. So we’re allowing them to do it, but the United States is getting 25 per cent of the chips in terms of the dollar value. And I think it’s a very good deal,” Trump said in the Oval Office on Wednesday.
A White House factsheet said the new tariff of 25 per cent would apply to chips such as the H200 and rival AMD’s MI325X that were first imported into the US and ‘transshipped’ back to customers around the world. It would also cover other US companies seeking to send AI chips abroad.
Nvidia and most of its US peers rely on Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan to manufacture the chips they design, including the H200 chip — an advanced AI processor that belongs to an older generation of Nvidia hardware.
Chips that are imported to the US to build out the country’s domestic artificial intelligence infrastructure would not be subjected to a levy, according to a presidential proclamation released on Wednesday afternoon.
The fresh duties came as part of a sweeping national security probe launched by the Trump administration early last year as the president kicked off a trade war against major US partners, roiling global markets.
These so-called Section 232 tariffs rely on a different legal basis than the emergency powers invoked by Trump to impose other sweeping global levies, which face a looming Supreme Court challenge.
However, Wednesday’s proclamation warned a second phase of the national security probe could result in “broader tariffs on imports of semiconductors and their derivative products”.
Trump has threatened to hit chips with tariffs of up to 100 per cent, but over the past year has offered carve-outs and exemptions to companies who pledge to build more manufacturing capacity in the US.
The national security probe found that the capacity of the US to manufacture chips was “insufficient to meet domestic demand”, leaving the US “dependent on foreign sources”.
Early last year, Nvidia committed to spending half a trillion dollars over the next four years on manufacturing its products in the US, as chief executive Jensen Huang responded to the Trump administration’s desire to onshore advanced electronics manufacturing.
TSMC has been building new manufacturing facilities in Arizona as part of a $165bn investment project. The new facility in October started producing Nvidia’s most advanced Blackwell chips for the first time.
But the vast majority of the world’s most advanced chips are still manufactured in Taiwan, before being shipped on to other locations to be packaged or installed inside servers and devices.
Nvidia welcomed Wednesday’s move, saying Trump’s policy “strikes a thoughtful balance that is great for America”. AMD said that it complies with all US export laws and policies.
The White House also unveiled the results of a long-awaited investigation into critical minerals, concluding that US dependence on imports of the metals posed a national security threat, since they are “embedded across defence and commercial supply chains”.
Trump directed commerce secretary Howard Lutnick to seek to negotiate deals with trading partners that included “trade-restricting measures” such as price floors for metals including gallium, germanium and rare earths.
The order stopped short of imposing tariffs on the materials — which are broadly used in industries from technology to energy and defence. But the White House said the president may take other action to address the risks, including if deals were not done within 180 days.
China dominates the markets for a host of critical minerals, including rare earths, an advantage it has leveraged in recent months by cutting off access.
