Despite a Friday announcement exempting semiconductors from reciprocal tariffs, the Trump administration clarified that tariffs are still forthcoming. Commerce Secretary Howard Lutnick stated that these tariffs will be implemented under Section 232, focusing on national security and involving a lengthy review process. This announcement caused confusion in the tech sector, which had initially celebrated the exemption.
The administration plans to use an industry-specific tariff model for semiconductors and pharmaceuticals to encourage domestic manufacturing. This approach differs from typical reciprocal tariffs that target trade deficits. The goal is to secure the entire supply chain, not just individual products.
The decision is driven by national security concerns, highlighting the U.S.'s dependence on Chinese-made components, even in weapons systems. While the process is still nascent, officials emphasize the need to reduce reliance on foreign production for critical items.
The fluctuating messaging surrounding tariffs caused significant uncertainty for businesses, investors, and the tech industry as a whole, disrupting planning and creating market instability. The sudden shifts in policy are criticized for hindering long-term planning and investment decisions in the affected sectors.
U.S. levies on semiconductor chips — which the White House exempted late Friday from a slew of “reciprocal” tariffs — are in fact still the works, Commerce Secretary Howard Lutnick and other top Trump administration officials asserted Sunday.
Lutnick said tariffs on semiconductors will be decided through an industry-specific tariff model and imposed via Section 232, which governs national security-related tariffs and requires a lengthy process for study and comment.
The Trump administration has previously cited 232 as a potential avenue for semiconductor tariffs. But the latest messaging twist could cause further whiplash for the tech sector, which had breathed a sigh of relief after the tech exemption was announced, hoping that semiconductors might remain somewhat unscathed from Trump’s trade war.
“This is really mind-boggling. If this was serious industrial policy, the main thing you want is certainty: ‘Here’s the tariff, it will be in place for the indefinite future, and you should plan accordingly,’” said Dean Baker, an economist at the Center for Economic and Policy Research, a left-leaning think tank. “Here, it’s basically: ‘Come back next week and see what we’ve got.’ That’s no way to run an economy.”
Speaking on ABC News’s “This Week,” Lutnick stated that tariffs for electronics such as phones and laptops will also be paused only temporarily, then resume in the coming months as part of the semiconductor tariff review.
“They’re exempt from the reciprocal tariffs, but they’re included in the semiconductor tariffs, which are coming in probably a month or two,” Lutnick said.
The Trump administration will establish an industry-specific tariff model for goods such as semiconductors and pharmaceuticals to encourage companies to re-shore manufacturing for these products in the United States, he explained.
President Donald Trump “called them sector tariffs, and those are not available for negotiation,” Lutnick said. “They are just going to be part of making sure we re-shore the core national security items that need to be made in this country.”
Lutnik also noted, “Virtually all semiconductors are made now in Taiwan, and they’re finished in China. It’s important that we re-shore them.”
Meanwhile, other officials pushed back on the idea that the White House has been inconsistent in its messaging around trade.
On CBS News’s “Face the Nation,” U.S. Trade Representative Jamieson Greer argued that the White House has to take a more deliberate approach to semiconductors than “reciprocal” tariffs — which are meant to only address trade deficits — because the administration’s goals cover the entire supply chain.
“We don’t even import semiconductors as such that much,” Greer said. “They go into downstream products. So we have to be very careful. We want the whole supply chain here, not just one product.”
National Economic Council Director Kevin Hassett, speaking on CNN’s “State of the Union,” said the tariff investigation into semiconductors has to do with broader concerns about whether U.S. dependence on Chinese-made imports could become a problem in a war between the two nations.
“The influence of China into every little corner of our country has just gotten bigger and bigger and bigger,” he said. “It actually is the case that there is a very uncomfortable amount of Chinese input in our actual weapons systems.”
But compared to typical Section 232 investigations into critical materials, the process on China is “very, very nascent, if at all,” Hassett said.
For the tech industry, Sunday’s clarification marked a return to the uncertainty that has roiled markets — just one day after it celebrated the White House announcement that the chip sector would be spared.
“The mass confusion created by this constant news flow out of the White House is dizzying for the industry and investors and creating massive uncertainty and chaos for companies trying to plan their supply chain, inventory, and demand,” Dan Ives, a senior analyst for Wedbush, wrote in a note to investors.
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