US chipmakers and makers of smartphones can sleep a little easier this month, now that the Trump administration announced that US companies that outsource their manufacturing to China will be exempt from its tariff, along with smartphones, computers, and some other electronics that will be imported from China.
On the subject of electronics, the US Customs and Border Protection (CBP) agency issued a list of tariff codes excluded from the import taxes, which retroactively went into effect on 5 April. 20 product categories, which includes the code 8471 for all computers, laptop, disc drives, automatic data processing, semiconductor devices, equipment, memory chips, and displays, was put on notice, with little or next to no explanation given by the Trump administration.
The exclusions of the specific electronics also apply to countries hit with the US President’s 10% “baseline” tariffs on goods from countries other than China, such as Taiwan and India, the latter recently being in the news due to Apple shipping out approximately 1.5 million iPhones out of the country, before the 90-day pause on the tariffs would go into effect.
For chipmakers like AMD, NVIDIA, and TSMC, this is tariff exemption is equally a boon for them as it is for other electronics brands, given that the bulk of their manufacturing process is still done in China, even with the ongoing shifts of factories and plants outside of the country occurring. “For all integrated circuits, whether packaged or unpackaged, the declared country of origin for import customs purchases is the location of the wafer fabrication plant,” the state-backed China Semiconductor Industry Association (CSIA), which represents the country’s largest chip companies, said in an “urgent notice” on its WeChat account.
But for companies like Intel, Texas Instruments and ADI, the doom and gloom may still sit deep for them. As these companies still use their own US-based fabs, China may still classify them as being of US origin and as such, slap them with its retaliatory 84% tariff rate, or higher.
The collective thought is that this tit-for-tat tariff brawl between the US and China has clearly gotten out of hand; the Trump administration’s tariff rate on China currently sits at 145%, while the Asian powerhouse’s own rates sits at 125%. It doesn’t take an expert to see that those rates could upend global supply chains and effectively bring trade between the two countries to a grinding halt indefinitely.
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