Trump imposes 25% tariff on advanced chips, invokes Section 232 national security authority

On Jan. 14, 2026, President Trump signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962 to impose a 25% ad valorem tariff on certain advanced computing chips, effective 12:01 a.m. EST on Jan. 15, 2026. The tariff specifically targets state-of-the-art processors including Nvidia's H200 chip and AMD's MI325X chip. Section 232 allows presidents to impose tariffs on specific products when imports threaten national security, the same authority Trump has previously used for steel, aluminum, copper, autos, and lumber.

The White House framed the tariff as addressing national security concerns, with a fact sheet stating, "President Trump recognizes that restoring capacity for domestic production of semiconductors, semiconductor manufacturing equipment, and their derivative products is critical for economic and national security." The proclamation followed completion of a Section 232 investigation by the Secretary of Commerce that found "the present quantities and circumstances of the imports of semiconductors, semiconductor manufacturing equipment, and their derivative products threaten to impair national security."

The 25% tariff doesn't apply to chips imported for several exempt purposes: U.S. data centers with more than 100 megawatts of new load for AI, training, or simulation; research and development in the United States; U.S. startups; repairs or replacements in the United States; non-data center consumer electronics applications like gaming PCs, professional visualization, and automotive; non-data center industrial applications like factory robotics and industrial machinery; and any use the Secretary of Commerce determines contributes to strengthening the U.S. technology supply chain or domestic manufacturing capacity.

Trump previously stated last Feb. he planned to impose 25% chip tariffs by Apr., but didn't formally initiate the Commerce Department investigation until months later. In Aug., Trump threatened 100% levies on chips and semiconductors but said companies that committed to building domestically would avoid the tariffs. He also said Nvidia would be permitted to sell its H200 chip in China but that the U.S. would take a 25% cut, essentially using tariffs as a mechanism for the U.S. government to extract revenue from international chip sales.

The White House warned that "in the near future, President Trump may impose broader tariffs on imports of semiconductors and their derivative products, as well as an accompanying tariff offset program to incentivize domestic manufacturing." The proclamation directed the Secretary of Commerce and U.S. Trade Representative to jointly negotiate agreements "to address the threatened impairment of the national security with respect to imported semiconductors" and provide an update within 90 days. By Jul. 1, 2026, the Secretary must provide an update on the market for semiconductors used in U.S. data centers so Trump can determine whether to modify the tariff.

Nvidia responded with a statement saying it "applauds Trump's decision to allow America's chip industry to compete to support high paying jobs and manufacturing in America. Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America." AMD said it "complies with all U.S. export control laws and policies." Market reactions were swift and volatile, with the Nasdaq Composite seeing a sharp intraday dip as investors grappled with potential margin compression among leading chip designers.

The tariff is separate from other Trump tariffs currently being challenged in a Supreme Court case. Customs and Border Protection issued detailed guidance on entry filing, Harmonized Tariff Schedule classifications (HTSUS 9903.79.01), and exemptions to ensure compliance. The guidance specifies that semiconductor articles meeting certain technical parameters for teraflops per penny (TPP) and DRAM bandwidth are subject to the 25% duty, with multiple categories of exemptions requiring documentation and certification of intended use.