Chip Tariff War: U.S. Precision Strikes and the Cracks in the Global Supply Chain
16/01/2026
Year Month Day, the morning in Washington was interrupted by a presidential proclamation. Citing Section of the Trade Expansion Act, the White House formally imposed a % import tariff on specific high-performance semiconductor chips. The outcome of a nine-month investigation, this move directly targets core components such as NVIDIA and that drive the artificial intelligence revolution. The text of the proclamation calmly states a fact: the United States currently produces only about % of the chips it needs entirely domestically, and this deep reliance on foreign supply chains constitutes a "significant economic and national security risk."
However, this is not an indiscriminate trade strike. A careful reading of the provisions reveals that chip imports intended for U.S. data centers, startups, non-data center civilian industrial applications, and the public sector are cleverly exempted. The blade of the tariffs falls precisely on those high-end chips that "transit" through the United States and ultimately flow overseas, particularly to China. In his subsequent remarks, President Trump described this mechanism in more straightforward terms: "We allow them to export, but the U.S. will receive a percentage of the sales. It's a good deal."
This game surrounding silicon wafers extends far beyond the mere increase or decrease of tariff numbers. It is a recalibration of the global technological power structure, a strategic adjustment made in the name of national security but aimed at reshoring industries, and it may very well serve as a milestone in the process of technological decoupling between the United States and China.
"Precision Surgery" under the terms
Analysis reveals that the design and implementation of this tariff action exhibit a high degree of complexity and strategic planning, markedly different from previous crude trade protection measures.
First, the choice of its legal basis is intriguing. The U.S. government abandoned the commonly used "Section 301" for addressing unfair trade practices and instead invoked "Section 232," which primarily targets national security threats. This shift elevated the issue from "fair competition" to a level of "existential threat," granting the executive branch greater discretionary power and making it more challenging for trading partners to contest its legitimacy. White House Chief of Staff Will Scharf explicitly linked this move to the goal of "ensuring the security of America's international supply chains" in a briefing, with the national security narrative underpinning all actions.
The scope of the tariffs resembles a meticulously calibrated "surgical strike". It does not cover all semiconductors; instead, through an annex list, it is strictly limited to cutting-edge products meeting specific high-performance standards (such as computing power thresholds). Chips like NVIDIA's H200 and AMD's MI325X, designed specifically for large-scale AI training and inference, are the first to be affected. More critically, the trigger condition for the tariffs is tied to the chip's "journey": only those manufactured overseas (primarily at TSMC's wafer fabs in Taiwan) and then transshipped through the United States to a third country (particularly China) will be subject to the heavy tariffs. Similar products imported directly into the United States for domestic consumption are exempt.
This "taxation upon transit" mechanism has created an unprecedented model of regulation and revenue generation. According to the new regulations, all specific high-end chips sold to China must be diverted from their manufacturing site in Taiwan through the United States for inspection by third-party laboratories. Once entering U.S. customs territory, a 25% tariff automatically takes effect. Trump described it as the U.S. taking a 25% cut from the sales revenue. This arrangement has sparked sharp legal scrutiny: the U.S. Constitution explicitly prohibits taxes on exports, and does this fee levied on "goods in transit," ultimately borne by foreign buyers, essentially constitute an unconstitutional export tax? Despite the controversy, the mechanism has rapidly moved from concept to practice, opening a new trickle of revenue for the U.S. Treasury from technology trade.
The complex exemption system reveals the inherent contradictions and pragmatic considerations within the policy. On one hand, the U.S. government aims to reduce its reliance on foreign chip manufacturing; on the other hand, it soberly recognizes that completely cutting off the supply of high-end chips would immediately paralyze its own booming AI industry and innovation ecosystem. Therefore, creating exemption channels for key domestic users such as data centers, R&D institutions, and the public sector has become a safety valve for maintaining its own technological competitiveness. Commerce Secretary Howard Letnik has been granted broad authority to adjudicate exemptions, further increasing the flexibility and uncertainty in policy implementation. Zhang Zhiyang, a tax expert at KPMG, points out that the specific criteria for determining exempt uses are not yet fully clear, making it difficult for companies to accurately assess their own situation at present, highlighting the ambiguities in the policy during its initial implementation phase.
Killing Three Birds with One Stone: A Multidimensional Interpretation of Strategic Intent
On the surface, this appears to be a trade policy; upon deeper analysis, however, it reveals multiple strategic objectives encompassing industry, geopolitics, and fiscal policy.
The most immediate goal is "reshoring of manufacturing" and supply chain restructuring. The White House announcement makes no secret of its intent: by increasing import costs, it creates incentives to encourage chip manufacturers to shift more production capacity to the United States. The U.S. maintains a lead in semiconductor design (with giants like NVIDIA, AMD, and Intel), but in the manufacturing segment, especially for cutting-edge processes, it heavily relies on Asian foundries like TSMC. This geographical separation of "design" and "manufacturing" is seen as a core vulnerability. The tariff policy, combined with the massive subsidies from the CHIPS and Science Act, forms a "carrot and stick" approach aimed at reversing this situation. In his speech, Trump claimed that since his return to the White House, the U.S. has secured "$18 trillion" in investment commitments. Although this figure requires verification, it indeed reflects his strategy of using tariffs as leverage to attract capital backflow.
The geopolitical leverage is particularly prominent. The policy is clearly targeted at China, yet it differs from a comprehensive embargo. It allows companies like NVIDIA to sell H200 chips to vetted Chinese customers, provided they pay a high "toll fee." This essentially creates a "controlled dependency": it prevents China from easily obtaining the most advanced computing power to accelerate its AI militarization applications, avoids completely cutting off supply which could force China to make a desperate, all-out effort and accelerate its self-reliance, while still profiting from China's demand. The Trump administration appears to be attempting to find a delicate balance between "strangling the neck" and "doing business." Furthermore, the policy sends a clear signal to chip-producing countries and regions such as Taiwan, South Korea, and Japan. The announcement implies that the United States will proactively negotiate with these partners. If an agreement ensuring supply chain support for U.S. domestic production capacity cannot be reached within 180 days, the scope of tariffs may be further expanded. This undoubtedly increases the United States' bargaining chips in trade and security negotiations with its allies.
Generating Fiscal Revenue and Implementing a "Transactional" Trade Policy. Trump views tariffs as a crucial source of revenue, repeatedly claiming they have brought "hundreds of billions of dollars" to the United States. Imposing tariffs on transiting high-end chips represents the ultimate application of this concept in the technology sector. It directly converts the global urgent demand for AI computing power into U.S. Treasury revenue. This highly "fiscalized" and "transactional" ("we get 25%") approach to trade policy overturns the traditional rules-based multilateral trade philosophy, leaning more towards a power-based commercial profit-sharing model.
Paving the way for broader future actions. The White House fact sheet clearly states that this is only the first step in a "two-step" process. The current tariff scope is relatively focused, but it may expand to a wider range of semiconductors and their derivatives in the future. This reserves space for subsequent policy escalation and keeps the global semiconductor industry in a state of continuous uncertainty. This "Sword of Damocles" strategy itself can exert a powerful deterrent and guiding effect on corporate investment and supply chain layout.
Chain Reaction: The Shocks and Games of the Global Industrial Chain
A stone thrown into a pond sends ripples far and wide. The chain reaction triggered by this U.S. move is rapidly spreading across the global map of technology and trade.
The most direct bearers are multinational chip giants. The attitudes of NVIDIA and AMD are intriguing. An NVIDIA spokesperson publicly "praised" Trump's decision, calling it "a great balancing act for the United States to support high-wage jobs and manufacturing." This is clearly a pragmatic statement under established policy. Obtaining a license to sell the H200 to China, despite incurring additional costs, is better than completely losing this vast market. AMD cautiously stated that it "complies with all U.S. export control laws and policies." The slight drop in stock prices in after-hours trading reflects the market's trade-off between short-term cost increases and long-term market access. The real challenge for these companies lies in how to redesign the extremely complex global logistics chain to adapt to the new "Taiwan - U.S. (testing, taxation) - China" pathway, while also preparing for the risk of future policies potentially tightening further.
Taiwan and TSMC are placed under the geopolitical spotlight. As the absolute main force in global high-end chip foundry, TSMC is the implicit key target of this tariff policy. The United States hopes to reduce its reliance on TSMC's manufacturing but cannot completely break away in the short term. This contradiction makes TSMC's situation exceptionally delicate. It must carefully balance the pressure from the US for production relocation (such as accelerating the construction of the Arizona factory) with its own considerations regarding global layout and commercial interests. Mainland China has accused the United States of "economic plunder" by pressuring TSMC, which further deeply intertwines the already highly sensitive chip manufacturing industry with the situation in the Taiwan Strait.
China's response strategy will be a key variable affecting the overall situation. In the face of the U.S. "toll" strategy, China cannot remain indifferent. Reports indicate that the Chinese government is drafting rules to control the quantity of overseas semiconductors (especially high-end AI chips) purchased by domestic enterprises. This reflects Beijing's dilemma: on one hand, it does not want domestic AI development to fall behind due to a shortage of computing power; on the other hand, it hopes to use this opportunity to support local chip industries such as SMIC and HiSilicon, reducing external dependence. China's countermeasures may not be limited to reciprocal tariffs (as China imports very few similar high-end chips from the U.S.), but are more likely to be reflected in export controls on critical raw materials like rare earths, market access restrictions for U.S. technology companies, or adopting a more assertive stance on other geopolitical issues. A tug-of-war of "precise decoupling" and "anti-decoupling" surrounding cutting-edge technology has already begun.
The global semiconductor industry landscape faces restructuring pressure. U.S. policies are forcibly altering the "economic geography" of the semiconductor supply chain. The original globalization model of division of labor, which pursued optimal efficiency, is now giving way to a "bloc-ization" trend oriented towards national security and regional self-sufficiency. Regions and countries such as Europe, Japan, and South Korea are all increasing investments in their domestic chip industries. This tariff action initiated by the United States is likely to accelerate the global formation of multiple relatively independent, yet mutually competing, semiconductor industry ecosystems. For global technology companies, the stability and cost of the supply chain will face long-term challenges. They will have to pay a higher premium for "security" and prepare multiple sets of contingency plans.
The Crossroads of the Future
This chip tariff action at the beginning of the year is by no means an isolated incident. It represents a deep implementation of the Trump administration's "America First" trade philosophy in the most strategically significant technological domain, as well as a new phase in the evolution of U.S.-China strategic competition—shifting from trade wars and technology wars to a more fundamental "computing power war."
Whether the policy will achieve its intended effects remains highly uncertain. Can a % tariff truly drive large-scale reshoring of cutting-edge chip manufacturing to the United States? Given the hundreds of billions of dollars in investment, lengthy timelines, and shortage of specialized talent required to build advanced wafer fabs, the answer is far from straightforward. It may prompt some capacity relocation, but it is unlikely to reshape the global industrial landscape in the short term. Instead, it is more likely to increase the cost of global research and development, ultimately borne by consumers and tech companies worldwide.
Legal challenges hang like a sword of Damocles. The U.S. Supreme Court is currently hearing lawsuits challenging the president's tariff authority, with Trump claiming that those filing the suits are "very pro-China individuals." If the Supreme Court ultimately rules that such applications of the provisions are unconstitutional, the entire policy framework could be shaken in an instant. Even if it holds up legally, this trade policy, which heavily relies on executive orders and is filled with discretionary power, injects immense unpredictability into the international business environment.
From a broader perspective, as chips—the "crude oil" of the information age—become the core target of international competition, the world is sliding toward a more fragmented technological system. The global flow of knowledge and collaborative networks that innovation relies on may be severed by tariff and regulatory barriers erected in the name of security. Through this "precision surgical strike," the United States aims to secure its leading position, profit from its rivals' technological needs, and reshape global supply chains. This is a risky move, and an ambitious one.
Its ultimate outcome will not only determine the commercial fates of giants like NVIDIA and TSMC but also shape the trajectory of global artificial intelligence development and the balance of power in geotechnology over the next decade. Every participant in the global industrial chain must now reassess their position and prepare for a new era characterized by higher costs, greater risks, and increased fragmentation. While the number of transistors on a chip continues to grow in accordance with Moore's Law, the global system that carries these chips may be heading in an unknown direction, one that runs counter to the trend of "globalization."
Reference materials
https://www.nytimes.com/2026/01/14/business/economy/trump-chips-tariffs.html
https://techcrunch.com/2026/01/15/the-us-imposes-25-tariff-on-nvidias-h200-ai-chips-headed-to-china/
https://www.businessinsider.com/trump-tariff-high-end-computing-chip-imports-nvidia-amd-2026-1
https://gulfnews.com/technology/trump-slaps-25-tariff-on-some-semiconductor-imports-1.500408917
https://udn.com/news/story/7238/9268340
https://www.diepresse.com/20479532/trump-verhaengt-zoelle-auf-hochleistungschips-von-nvidia-und-amd
https://www.theguardian.com/technology/2026/jan/15/trump-tariff-nvidia-ai-chips