Trump's semiconductor tariff plan likely delayed, officials say

Summary:

Trump aides are taking their time on chip tariffs as ‌they work to avoid a rupture with Beijing over trade issues, which would risk a return to a tit-for-tat trade war and disruption of the flow of critical rare earth minerals.

U.S. officials are privately saying that they might not levy long-promised semiconductor tariffs soon, potentially delaying a centerpiece of President Donald Trump’s economic agenda.

Officials relayed these messages over the last several days to stakeholders in government and private industry, according to two people with direct knowledge of the matter and a third person briefed on the conversations.‌ A fourth person following the matter also said the administration was taking a more cautious approach to avoid provoking China. The discussions have not been previously reported.

Those people cautioned that no decision is final until the administration signs off on it, and also said that triple-digit tariffs could be imposed at any time. The sources spoke anonymously in order to recount private conversations about policy deliberations.

Trump said in August that the United States would impose a tariff of about 100% ⁠on imports of semiconductors but exempted companies that are manufacturing ‌in the U.S. or have committed to do so. Privately, over the last several months, Washington officials had told people that the administration would roll out the tariffs soon. That guidance has now changed as the administration has continued to debate the ‍timing and other details.

A White House official and a Commerce Department official, asked about the discussions, disputed that the administration had adjusted its posture.

"That is not true," the White House official said, without specifying what was incorrect. "The administration remains committed to reshoring manufacturing that’s critical to our national and economic security." The Commerce official said, "There is no change in department policy regarding semiconductor 232 tariffs." Neither one specified how soon tariffs that have been threatened since the early days ‌of the Trump administration would be finalized, nor did they offer any other details.

TRUMP FACES PRESSURE ON CONSUMER PRICES

Any decision by the administration to slow down or narrow the scope of chip tariffs would come at a sensitive time for Trump. The Republican president is facing growing consumer angst over prices heading into the holiday shopping season.

Hiking taxes on imported semiconductors could raise consumer costs on the gadgets they power, from refrigerators to smartphones. Reuters reported in September that the Trump administration was looking at a plan that would also tax foreign electronic devices based on the number of chips in each one.

Trump rolled back tariffs on more than 200 food products last week, but he has ⁠also said that his import taxes have made no significant contribution to inflation. The U.S. government shutdown has delayed recent data on consumer prices, but inflation has been running above the Federal Reserve's target since former President Joe Biden held office.

Trump is also trying to maintain a delicate trade truce with China, a top manufacturer of both semiconductors and devices powered by them. Last month, Trump met Chinese President Xi Jinping in Busan, South Korea, ‍and reached an agreement to set aside their ⁠trade issues, for now.

During those conversations in Korea, U.S. officials nonetheless warned their Chinese counterparts that they could take national security steps in the coming months that Beijing might find objectionable, according to two people familiar with those conversations. Trump has bet that tariffs can revive domestic factory jobs ⁠lost over decades to countries including China.

In April, the Trump administration announced investigations into imports of pharmaceuticals and semiconductors as part of a bid to impose tariffs on them, arguing that extensive reliance on ‌their foreign production poses a national security threat.

Source: Reuters

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