Amazon, Google and Microsoft to get tariff relief from Trump admin on chips for data centres, says report — What we know
Considering the AI boom, United States President Donald Trump may grant tariff exemptions on chips used for AI data centers to major tech players in the country, including Microsoft, Google and Amazon, according to a Feb. 9 report from the Financial Times.
The US Commerce Department is expected to frame cuts in investments made by Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, according to the FT report, citing an administration official. The report stated that TSMC has committed to investing $165 billion to establish factories in the USA.
The FT said TSMC refused to respond to questions, while the commerce department and the White House had not responded by the time of this writing.
How will the tariff reduction work?
According to the report, the White House agreed to invest $250 billion in the domestic chip industry to reduce customs duties on imports from Taiwan to 15% and exempt companies, including TSMC, in proportion to their expansion plans in the United States.
The report cited a Commerce Department draft stating that Taiwanese players would be allowed to import tariff-free 2.5 times the planned capacity during the construction period for semiconductor facilities in the United States.
Taiwanese chip companies that already have facilities in the US will be allowed to import 1.5 times their capacity tariff-free.
Why does this ‘discount’ program work?
The “discount program” appears to be aimed at forcing TSMC to shift more production to the United States. This will allow TSMC to allocate the exemptions it “earns” to its US customers when the next round of tariffs are implemented, according to the report.
The plans have not yet been finalized or signed by Trump, the sources added. “We’ll be monitoring what emerges, like these hawks, after the fact, to make sure that the integrity of what we’re trying to achieve with tariffs and discounts isn’t undermined and that it doesn’t end up being a gift to TSMC,” the official told the FT.
Currently, only a small number of chips imported into the US and then exported to China (e.g. by AMD and Nvidia) are subject to the 25% tariffs that Trump imposed, citing national security reasons. Products that are not re-exported are exempt.
Could Taiwan move chip production to the US?
According to a report by AFP, the Trump administration aims to shift about 40% of Taiwan’s semiconductor manufacturing capacity to the United States; It’s a goal that negotiators in the island nation consider “impossible” to achieve.
US Commerce Department official Howard Lutnick said last month that Taiwan had warned that failure to shift up to 40% of its chip supply chain and production to the US could lead to increased tariffs for the leading chip-making country.
But in an interview with local TV channel CTS on February 8, Vice Premier and chief negotiator Cheng Li-chiun said he had made it clear to US officials that Taiwan’s semiconductor ecosystem would not be relocated. “Regarding moving 40 or 50 percent of production capacity to the United States… I have made it very clear to the US side that this is impossible,” Cheng said.
Taiwan’s semiconductor ecosystem is like an “iceberg”, the AFP report said, adding that the foundation beneath the water is “enormous” and that “an industrial ecosystem built over decades cannot be replaced. It will only continue to grow further.”
