Since the start of his term, President Trump has implemented tariff policy to strengthen semiconductor supply chains to protect national security and encourage insourcing of future manufacturing. Policymakers should build upon the previous success of a targeted and limited tariff policy in the next phase. Blanket tariffs on all semiconductors would undo much of the good work done to date of increasing domestic manufacturing.
If done correctly, applying the right policy will strengthen domestic manufacturing. At the same time, good tariff policy should allow access to necessary semiconductor inputs American companies need. The defense industrial base needs access to semiconductors because those inputs are essential pieces of technologies used to protect America. The Trump Administration is considering an expansion of the scope of semiconductor tariffs, which would hurt critical U.S. industries at a time when our nation establishes a vibrant domestic semiconductor manufacturing base that does not exist today.
As a legal foundation for his tariffs, President Trump used existing law for the end goal of insourcing more domestic manufacturing. The Trump Administration has used Section 232 of the Trade Expansion Act of 1962 as authority to impose tariffs on several imports conditioned on the Department of Commerce making a finding that targeted imported goods threaten national security. A good example of the use of that broad authority happened on April 2, 2026, when, according to the Tax Policy Center, the President announced two tariff changes under Section 232, including “one restructures tariffs on imported aluminum, steel, and copper, lowering some rates while adding new carve-outs and sourcing rules” and “the other raises tariffs to up to 100 percent on patented pharmaceutical imports.” The reduction of tariffs on imported aluminum was necessary to simplify a complicated system.
The Trump Administration should be applauded for using tariff policy to protect key industries critical for national security. Existing trade and tariff strategy has attracted investment from other countries, improving previously unbalanced trade and security relationships. Through the use of existing authorities granted by Congress, more domestic investment has strengthened America’s manufacturing base and addressed some supply chain-related issues.
Despite the success of the Trump Administration, reshoring manufacturing takes time. Right now, a broad-based tariff prevents American manufacturers, who rely on imported legacy semiconductors, from doing the very manufacturing that the Trump Administration wishes to promote for the future. The unrelenting hammer of broad-based tariffs may hurt the same nascent semiconductor industry that President Trump is trying to save.
Reshoring manufacturing of semiconductors will take time. Building semiconductor facilities takes years and tens of billions of dollars of investment. A problem is that while production continues to expand, many U.S. manufacturers, including defense contractors, automakers, medical device manufacturers, and tech companies, continue to rely on imported legacy semiconductors and globally integrated supply chains. A tariff that is too broad and precedes robust domestic manufacturing capacity will limit supply and raise prices for these end users.
Many have recognized the problems created by semiconductor tariff policy. The Information Technology and Innovation Foundation (ITIF) found on June 4, 2026, “a blanket 25 percent tariff on semiconductors alone would reduce U.S. gross domestic product (GDP) growth by 0.2 percent in the initial year, equivalent to more than $58 billion” and over 10 years “GDP would fall by a cumulative $1.6 trillion.” Those are staggering numbers, and the ITIF projects that a 50 percent tariff would hit the economy for $4.4 trillion over 10 years. Broad-based tariffs on semiconductors look like bad economic policy.
Other industries have benefited from targeted relief because of a lack of domestic supply. Reuters reported on July 20, 2026, “President Donald Trump said on Monday he signed a proclamation to adjust tariffs on imports of aluminum into the United States, adding the domestic production of primary aluminum in the U.S. was currently insufficient.” The same can be argued for semiconductors.
Instead of imposing a new broad-based tariff on all imported semiconductors, which may need to be modified in the future after the damage is done, the Trump Administration should consider deferring on a new tariff and give American companies time to in-source semiconductor manufacturing. Making semiconductors more difficult to source and expensive will weaken national security technology while hiking costs for consumers of electronics, vehicles, medical devices and telecom equipment.