US Imposes 25% Tariff on Certain Semiconductors, Pauses Duties on Critical Minerals

On Jan 14, 2026, US President Donald Trump on Wednesday signed an executive order imposing a 25% ad valorem tariff on selected imported semiconductors and related derivative products, citing national security concerns. The new duties will take effect on January 15, 2026, according to the White House.

The measure is enacted under Section 232 of the Trade Expansion Act of 1962 and is designed to reduce US reliance on foreign chip manufacturing while incentivizing domestic production. It aligns with broader efforts to strengthen the US semiconductor supply chain alongside incentives introduced under the 2022 CHIPS and Science Act.

Scope of the Semiconductor Tariffs

The 25% tariff targets certain advanced computing chips, including high-performance artificial intelligence processors such as NVIDIA's H200 and AMD's MI325X, as well as a narrowly defined set of derivative products described in an annex to the proclamation. These derivatives generally include downstream products or components that incorporate the covered chips and are deemed not to contribute to the development of the US technology supply chain.

For tariff classification purposes, the measure applies to goods entered under three US tariff codes: 8471.50, 8471.80, and 8473.30. However, not all products classified under these headings are automatically subject to the additional duty. To qualify, the products must be logic integrated circuits, or articles containing such circuits, and must meet one of two specific performance thresholds.

Under the first threshold combination, covered products must have total processing performance greater than 14,000 and less than 17,500, along with total DRAM bandwidth exceeding 4,500 GB/s but below 5,000 GB/s. Under the second combination, total processing performance must be greater than 20,800 and less than 21,100, with total DRAM bandwidth above 5,800 GB/s and below 6,200 GB/s.

Any final product classified under the specified tariff codes that contains chips meeting these performance criteria — including certain servers and high-end computing systems — may be treated as a derivative product and subjected to the 25% tariff.

Manufacturing Equipment Excluded, for Now

The current action does not apply to semiconductor manufacturing equipment such as lithography machines or other production tools. While the ongoing Section 232 investigation covers semiconductors, manufacturing equipment, and related derivatives, the White House emphasized that the initial phase of tariffs is limited to the specified chips and certain derivative products. Manufacturing equipment has not yet been targeted.

Potential Expansion and Tariff Stacking

The White House indicated that President Trump may extend tariffs to a broader range of semiconductor imports and derivatives in the near future to further encourage domestic manufacturing. The administration is also negotiating agreements with relevant countries, warning that failure to reach such deals could result in 'significant tariffs,' potentially including duties on semiconductor manufacturing equipment, accompanied by tariff offset mechanisms.

The Commerce Secretary is expected to update negotiations within 90 days and conduct an assessment of the data center semiconductor market by July 1, 2026, to determine whether further adjustments are warranted.

The newly imposed 25% duty will be levied in addition to any existing tariffs, fees, or charges currently applied to the affected imports.

Exemptions and Exceptions

The proclamation provides exemptions for covered products if the imports are used to support the development of the US technology supply chain or to strengthen domestic manufacturing capacity for semiconductor derivatives. Exempt uses include US data centers, domestic repair or replacement, US-based research and development activities, startup usage, non-data-center consumer applications such as personal devices, non-data-center civilian industrial uses, US public sector applications, and other uses deemed by the Commerce Secretary to enhance US supply chain resilience or domestic manufacturing capabilities.

The White House stated that imported semiconductors and related products pose a potential threat to US national security, noting the country's heavy dependence on foreign suppliers, including those in Taiwan and mainland China. In 2024, US semiconductor imports exceeded exports by more than $200 billion. The administration said the tariff action is intended to accelerate the reshoring of chip manufacturing.

The US Department of Commerce launched its Section 232 investigation into semiconductors, semiconductor manufacturing equipment, and derivative products in April 2025, covering the supply chain from wafers to downstream electronic products, a move widely seen as laying the groundwork for future tariff expansion.

Tariffs on Critical Minerals Put on Hold

Separately, the White House said President Trump has decided to temporarily suspend the imposition of new tariffs on imported critical minerals following a months-long review assessing whether foreign exports of such materials threaten US national security.

In a proclamation released on January 14, the president said the administration would prioritize negotiating agreements with foreign partners to 'ensure adequate US supplies of critical minerals and rapidly alleviate supply chain vulnerabilities'. The announcement followed the completion of a Commerce Department investigation into the sector.

The review found that as of 2024, the United States was 100% net import-dependent for 12 critical minerals, while net import reliance for an additional 29 critical minerals was at or above 50%. Even where domestic extraction capacity exists — such as for cobalt, nickel, and rare earth elements — the US remains dependent on downstream imports due to limited domestic processing capabilities.

Although the United States is the world's second-largest producer of unprocessed rare earth oxides, insufficient refining capacity requires these materials to be exported for further processing and then re-imported for domestic use, underscoring persistent structural vulnerabilities in the critical minerals supply chain.