Trump Administration to Implement New Semiconductor Tariffs Within Two Months

TLDR

• Commerce Secretary Lutnick announced tariff exemptions for electronics are temporary, with “semiconductor tariffs” expected in “a month or two”
• Trump clarified on social media that there was “no Tariff exception,” saying products are just moving to a different tariff “bucket”
• A national security trade investigation into the semiconductor sector and electronics supply chain is planned
• The focus is on reshoring critical technologies like semiconductors and pharmaceuticals for national security reasons
• Markets have experienced significant volatility, with the S&P 500 recently showing higher volatility than Bitcoin

The Trump administration has walked back its recent tariff exemptions for electronics imports, with Commerce Secretary Howard Lutnick announcing that these relief measures are only temporary. The exemptions, which covered smartphones, computers, and other electronic devices, will be replaced by new “semiconductor tariffs” expected within the next month or two.

In an April 13 interview with ABC News, Lutnick explained that electronic products would face “a special focus type of tariff” aimed at bringing semiconductor manufacturing back to American soil. “We need to have semiconductors, we need to have chips, and we need to have flat panels — we need to have these things made in America,” Lutnick said.

The commerce secretary stressed this was never meant as a permanent exemption. “These are things that are national security that we need to be made in America,” he added.

Trump himself took to his Truth Social platform on Sunday to correct perceptions about the exemptions. “There was no Tariff ‘exception’,” Trump posted. “These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff ‘bucket’.”

National Security Concerns

The administration is framing these tariff decisions around national security concerns. Trump promised to launch a security investigation into “the semiconductor sector and the whole electronics supply chain.”

“We will not be held hostage by other Countries, especially hostile trading Nations like China,” Trump stated in his social media post. This strategy targets certain sectors the administration views as critical to national security.

Lutnick outlined three specific industries the president has singled out: pharmaceuticals, semiconductors, and automobiles. According to the commerce secretary, these “sector tariffs” are “not available for negotiation” because they ensure “core national security items are made in this country.”

The focus on onshoring critical manufacturing suggests the tariffs may represent a long-term strategic policy rather than simply a negotiation tactic. “We can’t be relying on China for fundamental things we need,” Lutnick emphasized.

Market Impact and Trade Relations

The back-and-forth on tariff policy has triggered extreme market volatility. The S&P 500 index has fallen more than 10% since Trump took office on January 20, with some analysts noting the stock market has recently shown higher volatility than Bitcoin.

According to Bloomberg analyst Eric Balchunas, the S&P 500 hit a volatility level of 74 in April, compared to Bitcoin’s 71. Markets have swung wildly with each tariff announcement and revision.

The administration’s tariff moves have sent shock waves through the economy. Investors have dumped government bonds, the dollar has tumbled, and consumer confidence has dropped.

China has responded to the escalating trade war by strengthening ties with neighboring countries. Chinese President Xi Jinping began a tour of Southeast Asia on Monday, starting with a visit to Vietnam.

Ongoing Negotiations

Despite the tough talk on tariffs, Lutnick expressed optimism about future U.S.-China trade relations.

“I am completely confident, as is [Trump], that this will be worked out in a positive, thoughtful and effective way for the United States of America,” he said.

The commerce secretary praised Trump’s negotiating skills.

“Donald Trump has the ball. I want him to have it. He’s the right person with it. He knows how to play this game. He knows how to deal with President Xi.”

China’s commerce ministry described the earlier exemptions as “a small step toward correcting its erroneous unilateral practice of ‘reciprocal tariffs’,” and called for Washington to cancel the whole tariff regime.

The trade dispute has escalated quickly. U.S. levies on China have risen to 145%, while Beijing has set retaliatory tariffs of 125% on U.S. imports. On Friday, China said it would ignore any future increases in U.S. tariffs.

Critics, including Democratic Senator Elizabeth Warren, have denounced Trump’s approach. “There is no tariff policy – only chaos and corruption,” Warren said on ABC’s “This Week.”

As the administration continues to revise its tariff strategy, businesses and investors face ongoing uncertainty about trade policy and its economic impact. The potential semiconductor tariffs expected in the coming months will add another chapter to this developing trade story.