Trump’s latest tariff threat could make your life a lot more expensive

President Donald Trump is eyeing a “25% or higher” tariff across all semiconductor chips the United States imports, with rates likely to “go very substantially higher over a course of a year,” he told reporters on Tuesday.

President Donald Trump is eyeing a “25% or higher” tariff on all semiconductor chips the United States imports, with rates likely to “go very substantially higher over a course of a year,” he told reporters on Tuesday. Unlike cars and pharmaceuticals — which Trump said would soon face tariffs of at least 25% — chips are not something the average American buys on their own. But these miniature components power just about every piece of electronics we use. Medical devices, Wi-Fi routers, laptops, smartphones, cars, household appliances and LED lightbulbs are just a few of the many examples of where chips are found. And these products often don’t just require one or two. For instance, new cars contain thousands of them. A chip shortage quickly ensued at the height of the Covid-19 pandemic, as Americans sought to use their stimulus checks on upgrading their technology – particularly laptops, monitors and other electronics crucial for remote work and learning – and companies struggled to meet all the newfound demand. Eager to bring products to market, however, they looked to Taiwanese companies, which had — and continue to have — higher advanced chip production capacities compared to the United States. Not only has Taiwan benefitted from its proximity to the raw materials needed to produce chips, but its government has been investing in the industry since the 1970s, providing direct support to manufacturers that’s led to technological advances virtually unmatched by other countries. In total, the US imported $139 billion worth of semiconductors and other electronic components last year, according to Commerce Department data. Taiwan accounted for 27% of those imports, making it the source of chips and electronic components sent to the US. The value of chips and electronic shipments coming to the US from Taiwan increased more than sixfold from $9.4 billion in 2019 to $36.9 billion in 2024.