The latest tariff announcement coming out of the White House is about a\u00a0key piece of technology: chips.<\/p>\n
During an Oval Office meeting with Apple CEO Tim Cook on Wednesday, President Donald Trump said the U.S. would impose a whopping 100% tariff<\/a> on imported semiconductors and computer chips. But not for companies \u201cbuilding in the U.S.\u201d<\/p>\n There are a lot of details that still need to be filled in, but the idea here is to use tariffs to pressure companies to create production here.\u00a0The U.S. has tried plenty of strategies to accomplish this goal before.<\/p>\n For more than a decade, the U.S. has been focused on bringing semiconductor production back to the U.S., and it\u2019s cycled through different tactics.<\/p>\n \u201cOne is to just have the government pay some of the bill,\u201d said Gregory Allen, a senior adviser at the Center for Strategic and International Studies.\u00a0<\/p>\n The government can subsidize chip plant construction<\/a> with grants or tax credits \u2014 that\u2019s what Congress did under the Biden administration with the bipartisan CHIPS and Science Act<\/a>.<\/p>\n \u201cThe Trump administration also wants that increased construction, but they want the incentive to take the form of making it more expensive to build anywhere else, not making it cheaper to build in the United States,\u201d Allen said.<\/p>\n One hundred percent tariffs would for sure make it more expensive to build outside the U.S. But they also risk making products in the U.S. more expensive.\u00a0Still, this was the approach in the first Trump administration and under Biden too \u2014 both placed tariffs on Chinese-made chips in particular.<\/p>\n \u201cWhat Trump\u2019s doing though is a major dramatic expansion of that effort,\u201d said Chris Miller, an economic historian and author of \u201cChip War: The Fight for the World\u2019s Most Critical Technology<\/a>.\u201d<\/p>\n \u201cBoth because the tariff rate is going to go higher, and because it\u2019s going to apply not just on chips from China, but on chips from other countries, too,\u201d Miller said.<\/p>\n One way for companies to get out of the tariff is if they commit to building production in the U.S. <\/p>\n Although details there are not spelled out yet, Vivek Arya, research analyst with Bank of America, said a 100% tariff should be convincing enough, \u201cto at least commit to enough production to serve, at a minimum, their U.S. customer base.\u201d<\/p>\n Many already have, from Samsung to Intel<\/a>, on the back of the CHIPS Act and in the years after.\u00a0<\/p>\n