Trump Plans Chip Tariffs That Could Hit Servers & Laptops, Tech Industry Warns Of AI Setback

The Trump administration is preparing a fresh round of tariffs on imported semiconductors that could extend well beyond raw chips to cover finished hardware such as data center servers, laptops and gaming consoles. The move has drawn strong objections from technology industry leaders, who argue it risks undermining America's push to stay ahead in the global race for AI dominance.

Tariff relief tied to domestic investment

Politico reports that at the centre of the proposed framework is a mechanism championed by Commerce Secretary Howard Lutnick that would link tariff exemptions to a company's investment in US-based chip fabrication. Under this approach, firms would be allowed to import a set volume of semiconductors duty-free, with the size of that allowance tied to how much manufacturing capacity they commit to building domestically.

Officials are said to be examining tiered tariff rates and import caps that would vary by trading partner and by the size of their leading semiconductor manufacturers. A phased rollout of the new tariffs is also reportedly under discussion, though those familiar with the talks caution that the plan could still change substantially before finalisation.

A policy caught between two goals

The proposal highlights a conflict at the heart of the administration's economic strategy. Its push to rebuild chip manufacturing in the US stands at odds with its ambition to lead the world in AI development.

The tariff plan comes at a time when major American tech firms are investing hundreds of billions of dollars into large-scale server infrastructure to meet growing demand for advanced chips. Industry groups have cautioned that tariffs on imported components would substantially raise the cost of these projects, potentially prompting companies to delay or shrink planned data center expansions.

Jonathan McHale, who heads digital policy at the Computer and Communications Industry Association, whose members include Amazon, Google and Meta, compared the scale of the ongoing data center expansion to the construction of the transcontinental railroad, warning that added costs and reduced predictability make such investments harder to justify.

White House defends the plan

White House spokesperson Kush Desai defended the administration's approach, saying that reshoring semiconductor manufacturing remains a top priority for President Trump and pointing to hundreds of billions of dollars in investment already secured in the sector. He added that the administration would continue pursuing further investment and economic relief for Americans while protecting national security interests.