White House introduces 25% import duty on advanced AI processors under national security directive

The Trump administration unveiled tariff measures on Wednesday affecting imports of advanced artificial intelligence processors, including specific models from Nvidia and AMD, as part of an effort to strengthen domestic semiconductor production capabilities.

The White House issued a proclamation establishing a 25 per cent import duty on certain high performance chips and systems containing them. The directive stems from a nine month review conducted under section 232 of the Trade Expansion Act of 1962, which permits trade restrictions based on national security considerations.

The administration's order specifically names processors such as the Nvidia H200 and AMD's MI325X as examples of semiconductors subject to the new duties. The tariffs apply to chips meeting particular performance thresholds rather than targeting specific manufacturers or countries of origin.

According to the presidential proclamation, the United States currently produces only around 10 per cent of the semiconductors it requires domestically, creating what officials characterised as substantial economic and security vulnerabilities through dependence on international supply networks.

The scope of the tariff programme includes multiple exemptions designed to limit disruption to key sectors of the American technology industry. The White House confirmed that imports destined for United States data centres, which represent major purchasers of AI hardware, will not face the additional duties. Startup companies, consumer applications outside data centre use, civil industrial deployments, and public sector implementations also receive exemptions under the order.

Commerce Secretary Howard Lutnick has authority to grant additional exclusions from the tariff regime, according to the text of the proclamation.

Share prices for Nvidia, AMD and Qualcomm declined modestly in extended trading hours following the announcement.

The administration previously announced intentions in December to impose tariffs on Chinese semiconductor imports, citing concerns about Beijing's industrial policies in the chip sector. That separate action, following a section 301 investigation into legacy chip exports initiated during the Biden administration, has been postponed until June 2027.

Wednesday's announcement provides clarity on questions surrounding product coverage, duty rates, and potential exemptions that had remained unresolved since earlier policy signals. The combination of measures suggests a measured approach to semiconductor import restrictions at this stage.

Last year, the administration indicated Nvidia would be permitted to sell H200 processors to Chinese customers in exchange for a portion of revenues from those transactions. Legal analysts raised questions about whether such arrangements might conflict with constitutional provisions prohibiting export taxation.

Recent policy changes require China bound semiconductors manufactured in Taiwan to transit through the United States for third party verification before delivery. Upon entry to American territory, these chips become subject to the newly announced 25 per cent tariff.

Nvidia has not provided comment on the tariff measures. AMD responded with a statement confirming compliance with all United States export control regulations and policies.

The current administration has employed tariff policy extensively to encourage domestic manufacturing across multiple sectors. September saw announcement of wide ranging import duties including 100 per cent rates on branded pharmaceutical products and 25 per cent levies on heavy duty commercial vehicles.

Semiconductor and pharmaceutical import investigations launched in April formed part of broader efforts to reduce foreign production dependencies the administration views as national security concerns.

Whilst American companies including Nvidia, AMD and Intel maintain leadership in chip design, manufacturing overwhelmingly occurs overseas. Taiwan Semiconductor Manufacturing Company produces substantial volumes of advanced processors for United States firms. Neither TSMC nor the Semiconductor Industry Association provided immediate responses to the tariff announcement.

The White House fact sheet accompanying the order indicates the administration may implement broader semiconductor tariffs in future to further incentivise domestic production capacity.

Administrative guidance clarifies that duties imposed under this order will not compound with other section 232 tariffs previously established by the Trump administration. Semiconductors subject to the new 25 per cent rate receive exemptions from separate duties on copper, aluminium, steel, and automotive components.

Industry impact and market implications

The selective tariff structure reflects tensions between promoting domestic chip manufacturing and maintaining competitiveness of American technology companies that depend on imported semiconductors. By exempting data centre imports, the administration has preserved access to advanced AI hardware for major cloud computing providers and artificial intelligence developers whilst applying pressure on the broader supply chain. The approach may accelerate discussions around domestic fabrication investments, though constructing advanced semiconductor facilities requires years of lead time and substantial capital commitments. Companies throughout the AI ecosystem will need to evaluate cost structures and supply chain configurations as policy evolves, particularly given signals that more comprehensive semiconductor tariffs could follow. The measures also highlight ongoing geopolitical dimensions of chip production, with Taiwan's manufacturing dominance creating both economic dependencies and strategic considerations for Western technology industries.