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Taiwan is currently exempt from chip tariffs, but the rates could rise to 50% if a trade deal isn’t reached. The next significant challenge for the AI industry hinges on whether the US and Taiwan can agree on terms, given that Taiwanese server suppliers like Foxconn, Wistron, and Quanta produce much of NVIDIA’s AI hardware. According to Taiwanese media, the newly imposed 20% tariffs on exports to the US do not affect semiconductors or AI for now.
Currently, the Taiwan tariffs target only about 25% of US exports and exempt semiconductors, consumer electronics, and AI servers. This is good news for companies like NVIDIA and AMD, at least temporarily. However, the threat of chip tariffs still looms under Section 232, which the US is evaluating. Section 232 allows restrictions on imports that pose a threat to national security, with chips and AI equipment now on the list.
A potential increase in chip tariffs could affect NVIDIA’s profit margins significantly. We won’t speculate on the likelihood of these tariffs but note that President Trump has expressed concerns about Taiwan’s status as a “chip nation.” Securing a better deal might require increased investment from Taiwan in the chip sector, alongside TSMC’s $165 billion commitment. There are rumors Intel could also be involved, indicating America’s desire for full access to Taiwan’s chip technologies.
The evolving situation between the US and Taiwan will be fascinating to observe, but it appears that chip tariffs under Section 232 are a real possibility, with rates potentially ranging from 20% to 50%.
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