The flagship processor for artificial intelligence is in the crosshairs as Donald Trump imposes a 25% tariff on Nvidia AI chips. The new order specifically names the Nvidia H200, along with AMD’s MI325X, as subject to new import duties. This decision stems from a determination that foreign dominance in chip manufacturing undermines U.S. national security.
With the U.S. producing only about 10 percent of its own chips, the White House is using tariffs to incentivize a shift in production. The administration wants to see more factories built in America, reducing the geopolitical risk associated with relying on Taiwan. The 25% levy is intended to make foreign manufacturing less economically viable compared to domestic options.
Crucially, the White House has protected the biggest customers of these chips. U.S. datacenters, which buy these processors in bulk to train AI models, are exempt from the tariff. Startups and other civil applications are also safe. This suggests the tariff is less about raising revenue from American companies and more about strategic signaling and targeting foreign buyers.
The policy hits hardest on chips moving through the U.S. to China. Under new “detour” rules, chips made in Taiwan must be tested in the U.S. before shipping to China. This stopover triggers the tariff, effectively raising the price of these chips for Chinese end-users. It is a creative application of import law to achieve foreign policy objectives.
Market analysts note that while shares of Nvidia and AMD traded lower, the exemptions prevent a worst-case scenario for the industry. Commerce Secretary Howard Lutnick’s ability to grant further waivers provides a safety net. The order effectively puts the industry on notice: build in America, or face the costs.
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