Trump plans to impose 100% tariff on computer chips

Washington: President Donald Trump said on Wednesday that he will impose a 100 per cent tariff on computer chips, raising the spectre of higher prices for electronics, autos, household appliances and other essential products dependent on the processors powering the digital age.

“We will be putting a tariff of approximately 100 per cent on chips and semiconductors,” Trump said in the Oval Office while meeting with Apple CEO Tim Cook. “But if you are building in the United States of America, there is no charge.”

The announcement came more than three months after Trump temporarily exempted most electronics from his administration’s most onerous tariffs. The president said companies that make computer chips in the US would be spared the import tax. During the COVID-19 pandemic, a shortage of computer chips increased the price of autos and contributed to higher inflation.

Investors seemed to interpret the potential tariff exemptions as a positive for Apple and other major tech companies that have been making huge financial commitments to manufacture more chips and other components in the US.

Big Tech already has made collective commitments to invest about $1.5 trillion in the US since Trump moved back into the White House in January. That figure includes a $600 billion promise from Apple after the iPhone maker boosted its commitment by tacking another $100 billion on to a previous commitment made in February.

Now the question is whether the deal brokered between Cook and Trump will be enough to insulate the millions of iPhones made in China and India from the tariffs that the administration has already imposed and reduce the pressure on the company to raise prices on the new models expected to be unveiled next month.