President Trump has been clear that tariffs — not unchecked government spending — are the most effective way to rebuild American industry. While he has criticized spending programs like the CHIPS Act, his Commerce Department’s pending semiconductor tariffs are the necessary complement to those investments. Without tariffs, taxpayer-supported fabs risk standing idle, while multinational companies continue sourcing their chips from Asia.
The Commerce Department initiated its Section 232 investigation into semiconductor imports in April. Section 232 is a national security statute that empowers the president to impose tariffs if imports threaten U.S. security. Under President Trump, economic security is national security — and semiconductors are the most critical technology of the 21st century. Trump has floated tariffs of up to 100% on chips, with findings expected from Commerce by late December.
Tariffs are not only about protecting national security — they are about creating demand. Without demand, new U.S. fabs risk becoming white elephants. We have already seen warning signs: Samsung has delayed its $44 billion Texas fab, citing “no customers.” Intel, Micron, Texas Instruments, and even Taiwan Semiconductor (TSMC) are all building in the U.S., but without tariffs, the default option for Apple, Dell, HP, and Lenovo is to keep buying chips from Taiwan and South Korea. Tariffs change the economics: buy from U.S. fabs or pay the duty. That is the essence of a chip-for-chip policy.
Some exemptions have already been floated. Apple, for example, reportedly secured a temporary break for finished products like iPhones and laptops. That kind of carve-out is dangerous. It creates a perverse situation where Apple can import a MacBook assembled in Asia duty-free but pay tariffs on inputs it might otherwise source for making laptops in Texas.
If exemptions are unavoidable, they must have strict guardrails. Commerce should limit quota concessions to companies that are actively investing in U.S. fabs, they should tie exemptions to projects on track — temporary only until U.S. fabs come online — and they should claw back benefits if companies fail to fulfill investment pledges. Empty promises of future spending cannot be a get-out-of-tariff-free card.
Most semiconductor imports don’t arrive as raw chips — they arrive embedded in finished products. In 2024, the U.S. imported $140 billion in computers but only $40 billion in chips. If we tax raw chips but allow assembled boards, line cards, and laptops to come in duty-free, U.S. companies will just buy the finished goods abroad. That accelerates offshoring instead of reshoring. The tariff design must apply both to raw chips and the chip value inside finished devices.
The CHIPS Act alone is not enough.
Without tariffs, it risks becoming a subsidy program for fabs that produce here but ship their chips back to Asia for assembly into final products. A comprehensive strategy requires three pillars: CHIPS Act incentives to build fabs, Section 232 tariffs to guarantee demand for those fabs, and tariffs on downstream products to prevent finished goods from undercutting U.S. assembly. Why import a motherboard and pay a tariff, when you can import the whole computer without a tariff?
This three-pillar strategy is how China has captured the global market: combining incentives with protection to build a complete, soup-to-nuts domestic supply chain. It’s one of the reasons why the U.S. is so dependent on China for manufactured goods.
Commerce will need to be careful with sectors like medical devices, which rely on chips but are manufactured in the U.S. today. Section 232 allows for surgical carve-outs, but these should be narrowly drawn.
The broader point is clear: chips are in everything from smartphones to MRI machines to fighter jets. Securing semiconductor supply chains is inseparable from securing U.S. national and economic security.
Tariffs are not a blunt tool — they are a targeted way to disrupt the Asia-centered model of global manufacturing. Combined with CHIPS Act incentives, they tell global tech companies: if you want to sell into the U.S. market, you must invest in America. That’s how Washington disrupts the Asia-pivot. If not, we risk the U.S. simply being the country that only innovates while Asia does all the work, until the point where they can out-innovate you and build it, too.
Commerce must make these tariffs strong, understandable, and loophole-free. A tariff strategy, coupled with CHIPS Act tax breaks, is how we maintain leadership in the most important industry of the future.
Kenneth Rapoza is a former Wall Street Journal reporter based in Brazil and a longtime chronicler of the BRIC economies for Forbes. He is now an industry analyst at the Coalition for a Prosperous America.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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