The US imposed a 25 per cent tariff on imports of certain advanced semiconductors.

The US imposed a 25 per cent tariff on imports of certain advanced semiconductors, a key step in an agreement blessed by President Donald Trump allowing Nvidia to ship Taiwan-made H200 artificial intelligence processors to China. Under an order Mr Trump signed on Wednesday, the government would collect the duty on the chips as they’re brought to the US before final shipment to Chinese customers and other foreign markets. Nvidia relies on Taiwan Semiconductor Manufacturing to produce the chips it designs, including the H200 that was cleared for sale to China by Mr Trump in December. “It’s not the highest level, but it’s a very good level. And China wants them, and other people want them, and we’re going to be making 25 per cent of the sale of those chips, basically,” Mr Trump told reporters Wednesday during a signing ceremony. The president is holding off for now on applying tariffs to a broader swath of foreign-made chips, following an investigation under Section 232 of the Trade Expansion Act that found they harm US national security. Instead, he directed Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer to “pursue negotiation of agreements” on imports and to report back in 90 days, according to the proclamation he signed. Mr Trump may announce new tariffs and an accompanying offset program to incentivise domestic manufacturing “in the near future”, a White House fact sheet said. The 25 per cent tariff applies to “a very narrow category of semiconductors that are an important element of my administration’s AI and technology policies,” the proclamation said. That includes the H200 and AMD’s MI325X, according to the fact sheet. There is an exception for those chips that are “imported to support the buildout of the United States technology supply chain”. Mr Trump signed the measure a day after the Commerce Department’s Bureau of Industry and Security eased its criteria for securing licences to export H200 chips to China. That surcharge is a condition Mr Trump required in exchange for allowing Nvidia to sell in China. The US must still take additional actions before Nvidia can send the chips to China, including the approval of export licenses by BIS. That process can take weeks or months and it’s unclear when it will conclude. Taiwanese products have generally faced a 20 per cent tariff upon entering the US, though semiconductors have been spared as commerce officials conduct a national security investigation into whether new levies should be applied across the chip sector. Mr Trump has yet to follow on imposing tariffs, as negotiations with Taiwan and major technology companies continue. Top Taiwanese officials are travelling to Washington on Wednesday for talks on finalising a deal to lower its overall tariff rate to 15 per cent and expand TSMC production facilities in the US, according to people familiar with the matter. Mr Trump’s decision marked a significant victory for Nvidia, which has pushed US policymakers to loosen export controls that have kept the company from selling its AI chips to the world’s largest semiconductor market. Nvidia chief executive Jensen Huang has forged a close relationship with Mr Trump and has used those ties to persuade the president that restrictions only boost Chinese domestic giants, such as Huawei Technologies. It’s a turnabout from years of US policy that sought to limit Beijing’s access to advanced American technologies and has provoked blowback from Democrats and national-security hawks in Washington who say the move will embolden an adversary that is keen on gaining ground in the AI race. Mr Trump took a hard line against Beijing at the outset of his presidency, making good on a campaign promise to crack down on its economic practices. But after triggering a trade war by imposing sky-high tariffs on Chinese goods, he eased off his pressure campaign by striking a truce with President Xi Jinping. Mr Trump also made it clear he’s OK with doing some business with Beijing in sensitive areas, as long as the US government gets a financial cut. He teased that a similar arrangement on chip exports is in the works for other companies, including Intel and AMD. “This policy will support American Jobs, strengthen US Manufacturing, and benefit American Taxpayers,” Mr Trump posted on December 8th. - Bloomberg

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