25% Tariff on Re-exported Semiconductor Chips
Trade Minister Postpones Return from U.S. Visit
Tariffs on Critical Minerals Put on Hold
The Donald Trump administration has announced a 25% tariff on certain imported semiconductors, indicating that tariff measures could be expanded to cover the entire semiconductor sector in the future. While a 25% tariff was imposed on semiconductors such as Nvidia's H200 that are imported into the United States and then re-exported, tariffs on critical minerals have been temporarily postponed in consideration of the U.S.-China trade truce. Yeo Han-koo, Deputy Minister for Trade Negotiations at the Ministry of Trade, Industry and Energy, who is currently visiting the United States, has decided to delay his return to Korea in order to assess the impact of these measures on Korean companies.
25% Tariff Announced on Nvidia Chips for Export to China...Possibility of Broader Semiconductor Tariffs Suggested
On this day, President Trump signed a proclamation imposing a 25% tariff on semiconductors such as Nvidia's H200 that are imported into the United States and then re-exported to other countries. After signing the proclamation, he referred to Nvidia's H200, saying, "It's not the highest spec, but it's a very good chip," and added, "China wants it, and others want it too. We will earn 25% of the sales of that chip."
President Trump had previously stated in December of last year that, while exports of the H200 to China would be permitted, 25% of the sales revenue would be paid to the United States.
This measure follows the submission of an investigative report by the U.S. Department of Commerce on December 22 of last year under Section 232 of the Trade Expansion Act, which examined the impact of semiconductor imports on U.S. national security. In this report, the Secretary of Commerce found that semiconductors, semiconductor manufacturing equipment, and related derivative products are being imported in quantities and under conditions that threaten U.S. national security.
Accordingly, President Trump specified in the proclamation that a 25% tariff would be imposed on certain semiconductors imported into the United States if they do not contribute to building the U.S. technology supply chain or strengthening domestic manufacturing capacity for semiconductor derivative products. The White House announced that Nvidia's H200 and AMD's MT325X are among the products subject to the 25% tariff. In fact, virtually all of Nvidia's AI chips are manufactured by Taiwan's TSMC and shipped to the United States, thus undergoing a "import and re-export" process.
President Trump also explained that Section 232 of the Trade Expansion Act "grants the president authority to adjust imports of items being imported in such quantities or under such conditions as to threaten national security," and that "this may include negotiations with foreign countries as well as various import adjustment measures, including tariffs."
In a separate fact sheet, the White House stated, "President Trump may soon impose broader tariffs on imports of semiconductors and their derivative products to promote domestic manufacturing, and is also considering the introduction of a corresponding tariff offset program."
President Trump cited domestic data centers and U.S.-based research and development or industrial applications as areas not subject to the 25% semiconductor tariff. He also noted that other uses of semiconductors, as determined by the Secretary of Commerce to contribute to strengthening domestic manufacturing capacity, would be exempt as well.
The Deputy Minister for Trade Negotiations, who is currently in the United States, decided to postpone his scheduled return to Korea in order to assess whether the semiconductor-related proclamation signed by President Trump would impact Korean companies. He explained, "I plan to stay one more day to further assess the impact on us, and to determine if there is a need to meet with additional U.S. officials while on site."
Tariffs on Critical Minerals Temporarily Postponed...Trump Orders Start of Negotiations
On this day, President Trump also signed a proclamation directing that negotiations be initiated with trading partner countries to ensure that imports of critical minerals align with U.S. national security interests. According to the proclamation, the Department of Commerce and the Office of the United States Trade Representative (USTR) may consider measures such as setting minimum import prices for certain critical minerals, depending on the outcome of negotiations. As a result, the imposition of tariffs on critical minerals, including rare earth elements, has been postponed.
Instead of imposing tariffs immediately, President Trump stated, "We will pursue negotiations with foreign governments to secure sufficient supplies of critical minerals for the United States and to mitigate supply chain vulnerabilities as quickly as possible." Bloomberg News noted that the absence of immediate tariffs on critical minerals signals the Trump administration's intention not to disrupt the U.S.-China trade truce agreed upon last fall.
President Trump also signed a Senate-passed bill on this day allowing public schools participating in the federal school lunch program to provide students with whole milk. This repeals the guidelines from the previous Barack Obama administration, which had required that only low-fat milk be served to students.
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