The U.S. government is considering imposing tariffs on semiconductors to boost domestic production while also exploring location tracking technology in AI chips to monitor and control their global distribution, particularly to prevent access by strategic adversaries. This combined approach aims to strengthen national security and economic competitiveness amid the growing importance of advanced AI technologies.
The U.S. government is preparing to impose tariffs on semiconductors as part of a broader strategy to encourage domestic production. While chips have previously been spared from country-specific tariffs, an upcoming order expected from former President Donald Trump could apply tariffs to semiconductors regardless of their origin. This move aligns with the administration’s goal to boost manufacturing within the U.S., similar to efforts seen in pharmaceuticals, autos, and copper industries. However, this policy will likely increase costs for industries reliant on chips, such as automakers and semiconductor manufacturers themselves.
The anticipated tariffs, which could reach up to 25%, pose significant challenges for companies heavily invested in artificial intelligence (AI) and cloud computing, often referred to as hyperscalers. These companies depend on semiconductors as a major input cost, and higher tariffs could impact their expansion plans and profitability. The Commerce Department has been investigating the need for such tariffs under a legal framework known as the Section 232 process, which provides a stronger legal basis than previous reciprocal tariffs. The timing and scope of these tariffs, including potential exemptions for semiconductor manufacturing equipment, remain uncertain.
In addition to tariffs, the U.S. is focusing on controlling the export and distribution of advanced AI chips. The administration aims to expand the American technology stack globally, including into markets like China, the Middle East, and others. Recent agreements with countries such as the United Arab Emirates and Saudi Arabia highlight this broader export strategy. However, the U.S. government wants to ensure that these advanced chips do not fall into the hands of adversaries or are diverted through illicit channels.
To achieve this, the U.S. is considering implementing location tracking technology within AI chips. This would allow the government to monitor where the chips are being used and prevent unauthorized resale or smuggling. The tracking measures are intended to safeguard national security by restricting access to advanced AI capabilities by countries like China, Russia, and Iran, which are viewed as strategic competitors or threats.
Overall, the U.S. approach combines economic measures like tariffs to encourage domestic semiconductor production with technological controls to manage the global distribution of sensitive AI chip technology. This dual strategy reflects the critical role semiconductors play in both economic competitiveness and national security, especially as AI technology continues to advance and proliferate worldwide.