AI industry says Trump plans to tax chips in the

What happened

Donald Trump may be preparing to announce sweeping new semiconductor tariffs at the absolute worst time, the tech industry fears. ” About eight people familiar with the Trump administration’s plans were granted anonymity to discuss how the tariffs might work. ” That scenario is the tech industry’s nightmare.

To shield AI firms, the Trump administration is mulling some tariff relief, but sources told Politico that it would likely be tied to foreign firms investing in US chip manufacturing, like Taiwan Semiconductor Manufacturing Co. Apparently, that’s the approach to relief that Commerce Secretary Howard Lutnick most favors.

Perhaps mindful of the data center development timeline—and possibly the upcoming holiday season, as Trump previously has exempted goods from tariffs to avoid consumer backlash that negatively impacted his approval ratings—the administration may impose tariffs in phases to avoid the worst impacts hitting all at once.

The global data center buildout already has the tech industry broadly scrambling for access to high-end semiconductors, which are forecasted to remain in short supply well into 2027. 6 trillion in 2026—much sooner than expected. ” Tariffs could also hurt companies like Apple, which competes with foreign rivals overseas that wouldn’t have to deal with the tariffs.

Chinese firms could benefit, Politico suggested, as chip suppliers potentially avoid tariffs by increasing business in China. Politico’s sources confirmed that the tech industry is so panicked by the risk of semiconductor tariffs that it “launched a lobbying blitz” to guarantee that data centers at the very least would be exempted.

” “This may be the single dumbest way imaginable to pursue American dominance in AI,” said one tech official who, Politico reported, is from a major industry group and also served in the first Trump administration.

Why it matters

Since Trump took office, trade groups have warned that imposing tariffs on both semiconductors and the many downstream products that use semiconductors—potentially even taxing used or refurbished products that contain chips—would be ruinous for the economy.

Most absurdly, given the priorities of Trump’s AI Action Plan, that tariff approach would cost the US about $90 billion annually in GDP losses and cause about 20 percent of data center projects planned through 2030 to be delayed or canceled, the Computer and Communications Industry Association (CCIA) estimated in June.

The tariffs could even drive more data center development outside the US, the CCIA warned, which seems counterproductive, since Trump is imposing them in order to force more development into the US.

Beyond disrupting the momentum of data centers, the tariffs could have wide-ranging ripple effects if certain products aren’t exempted, the CCIA said in a May letter to Treasury Secretary Scott Bessent, which was cosigned by about 20 trade groups. For consumers, prices of “everyday tools,” like smartphones, laptops, tablets, smartwatches, connected devices, and vehicles, could increase at a time when US households are already budget-strained.

Tariffs could also limit technology choices for Americans by delaying new product launches, including devices featuring the latest AI technologies. And any dampened demand for popular tech risks further limiting innovation while seemingly working in lockstep with tariffs to slow AI adoption in the US, the letter warned. “Consumer devices are the primary interface through which Americans access AI-powered tools.

AI only delivers on its promise when people can actually use it—and tariffs that price consumers out of the device market would slow AI adoption at the very moment the United States is positioned to lead,” the letter said.

What to watch

For the tech industry, the hope is that Trump will recognize an inherent tension at the heart of his semiconductor tariffs plan: Taxing data centers on chips during the key time they need to acquire as many as possible to scale AI infrastructure will not increase demand for chips produced domestically for a simple reason.

Domestic chip plants take years to build, and the US can’t rush that timeline, so firms will remain heavily dependent on importing semiconductors. As a detailed report from The Next Web summarized the problem: “Taxing the imports in the meantime raises the cost of the thing the administration also says it wants, which is American AI infrastructure at scale.