The Trump administration may soon impose sweeping semiconductor tariffs.
The tech industry fears this could slow AI innovation in the US.
The CCIA estimates $90 billion in annual GDP losses and 20 percent of data center projects delayed or canceled through 2030.
What happened
Politico reported that the Trump administration is preparing a wide range of new semiconductor tariffs that could hit chips and many goods made with them, like gaming consoles and data center servers. Commerce Secretary Howard Lutnick favors a system where the US would let a set volume of chips enter duty-free, tied to how much companies pledge to produce on American soil.
Why it matters
The Computer and Communications Industry Association (CCIA) estimates the tariffs could cost the US about $90 billion annually in GDP losses and delay or cancel about 20 percent of data center projects planned through 2030. One tech official called this "the single dumbest way imaginable to pursue American dominance in AI," saying it's "like kneecapping yourself at the starting line."
What to watch
Trade groups' biggest ask is to avoid stacking tariffs so firms don't pay a double tax on both the semiconductors within derivative products and the products that contain them. They also hope the administration applies tariffs in "a nuanced and targeted way" or avoids them entirely.
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The tech industry is currently scrambling for access to high-end semiconductors, which are forecasted to remain in short supply well into 2027. Gartner just forecasted that global semiconductor revenue will reach $1.6 trillion in 2026 due to shortage-driven price increases. Adding tariffs on top of this shortage could further increase chip prices, potentially hammering US chip designers like Nvidia and Advanced Micro Devices that rely on overseas manufacturers.
Industry representatives have been meeting with Trump officials with increasing frequency since the start of summer, but the talks have recently "trended in a negative direction." Lutnick appears to be standing in the way, believing the US needs to apply tariffs broadly to prioritize reshoring the domestic supply chain. Critics worry that his preferred structure risks widening the gap between the supply of tariff-free chips and the volume US companies need, with one tech representative noting that the proposed duty-free volume wouldn't even cover the hyperscalers alone.
A Commerce Department report submitted on July 1 that would determine if the data center exemption survives remains unpublished and is likely at the center of officials' discussions with tech lobbyists. The CCIA's report suggested that the next round of tariffs could avoid the worst consequences by carving out exemptions for semiconductors used in AI servers and by lowering the presumed tariff rate from 25 percent to 10 percent.
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