AI industry says Trump plans to tax chips in the “single dumbest way imaginable”

Key Points:

• The Trump administration is reportedly preparing to impose broad new semiconductor tariffs that could extend beyond chips to products containing them, such as gaming consoles and data center servers, raising fears in the tech industry of significant economic harm and disruption to AI innovation in the US.
• Industry groups warn that these tariffs could cost the US about $90 billion in GDP annually, delay or cancel roughly 20% of planned data center projects through 2030, and potentially drive data center development overseas, undermining the administration's goal of boosting domestic chip manufacturing.
• The tariffs risk increasing prices for consumer electronics and limiting technology choices, thereby slowing AI adoption at a critical moment, while the administration considers limited tariff relief tied to foreign investment in US chip production.
• Despite extensive lobbying efforts by the tech industry for exemptions—particularly for data centers—recent talks with the administration have turned negative, with Commerce Secretary Howard Lutnick reportedly advocating for broad tariffs linked to reshoring commitments, which critics say do not align with current domestic supply capabilities.
• Trade groups urge a more targeted tariff approach, including exemptions for AI server semiconductors, lower tariff rates, and avoiding double taxation on chips within derivative products, emphasizing that policies should focus on expanding domestic capacity and infrastructure without imposing broad economic costs.