US officials have subtly hinted that there is a high likelihood they may not implement the long-awaited semiconductor tariffs anytime soon. As a result, they suggested that this move could delay a crucial aspect of US President Donald Trump’s economic plans.

This announcement came after two individuals directly aware of the situation and a third person who has been updated on these talks stated that officials have disclosed this information to both government and industry stakeholders over the past few days.

Another person who had been tracking the progress of the matter all along pointed out that the administration is being cautious in its move to avoid upsetting China. Notably, these discussions have not been reported before.

Trump’s move on chip tariffs ignites tension among semiconductor manufacturers

Two sources noted that the Trump administration is not rushing to decide on chip tariffs because it intends to prevent a conflict with Beijing over trade issues. However, these sources argued that this decision could lead to new conflicts and disrupt the supply of key rare earth minerals.

According to the sources, no decision is guaranteed until the administration approves it, warning that high tariffs could be imposed at any time. These sources wished to remain anonymous, as the Trump administration had not yet made these discussions public.

The topic emerged when Trump declared in August this year that the US would implement around 100% tariffs on semiconductor imports. However, the president outlined a condition that these tariffs would not apply to firms manufacturing in the US or those with the intention of manufacturing in the country.

The tariff announcement caused tension in the market as semiconductor manufacturers awaited Trump’s final decision. Meanwhile, recently released reports pointed out that Washington officials privately implied that these tariffs would be introduced soon. The suggestion has now changed as the administration continues to debate when and how to proceed.

As the situation intensified, reporters sought to contact Washington officials for their comments on the situation and to address the heated debates among individuals. When asked regarding the progress of the recent discussions, a White House official and a Commerce Department official denied that the administration has shifted its perspective. In a statement, the White House official said, “That is not true,” without explaining what was incorrect.

The Commerce official, on the other hand, argued that the administration remains committed to revitalizing manufacturing, a crucial aspect of American national and economic security. “There is no change in department policy regarding semiconductor 232 tariffs,” the official added. 

Neither official mentioned when the tariffs, which have been suggested since the early days of Trump’s presidency, would be completed, nor did they provide additional information about these tariffs.

Several analysts commented on the situation. They claimed that if the administration favours postponing or laying restrictions on the chip tariffs, it would do so during a delicate moment for Trump. Currently, the republican president is 

dealing with growing concerns from consumers regarding prices as the holiday shopping season approaches. 

Trump seeks to keep a fragile trade peace with a leading producer of semiconductors

Analysts have noted that increasing taxes on imported semiconductors could lead to higher costs for consumer products, such as refrigerators and smartphones. 

Their argument followed a report in September from a reliable source that the Trump administration was considering a plan to tax foreign electronic devices based on the number of chips each one contains. In the meantime, Trump decided to reduce tariffs on over 200 food items last week, while stating that his import taxes have not significantly impacted inflation. 

Following Trump’s remarks, sources noted that the recent government shutdown had postponed the release of the latest consumer price data; however, inflation had remained higher than the Federal Reserve’s target since Joe Biden became president. 

Currently, Trump is working to keep a fragile trade peace with China, which is a leading producer of semiconductors and related devices. To illustrate his commitment to achieving this goal, he met with Chinese President Xi Jinping last month in Busan, South Korea, and they agreed to set aside their trade concerns temporarily. 

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program