On 14 January 2025, President Donald Trump issued a proclamation titled “Adjusting Imports of Semiconductors, Semiconductor Manufacturing Equipment, and Their Derivative Products into the United States” (the Proclamation). The Proclamation follows a Section 232 investigation, which concluded that imports of semiconductors and related products threaten to impair U.S. national security. The investigation cited the United States’ heavy reliance on foreign semiconductor supply chains.

The Proclamation adopts the Secretary of Commerce’s recommended two-phase approach to adjusting semiconductor imports. Phase 1 introduces a deliberately narrow and targeted measure. Phase 2 contemplates broader action following the conclusion of ongoing trade negotiations.

The key features of the Phase 1 action are set out below.

 1. Scope of the Phase 1 Tariff

A. Products Covered by the 25% Tariff

Under the Proclamation, the first phase of the plan of action is implemented with a deliberately limited scope. Accordingly, from 15 January 2026, an immediate 25% ad valorem tariff will apply only to a narrow category of advanced computing chips and derivative products identified in an Annex to the Proclamation (the Covered Products).
Specifically, the tariff applies to certain logic integrated circuits, as well as articles containing those circuits. Moreover, these products must meet specific technical thresholds, including total processing performance (TPP) and total dynamic random-access memory (DRAM) bandwidth.

Importantly, the Covered Products are limited to selected items classified under the following HTS headings:

• 8471.50 – Processing units
• 8471.80 – Other automatic data processing machines
• 8473.30 – Parts and accessories for automatic data processing machines

However, the Proclamation does not extend the tariff to semiconductors or semiconductor manufacturing equipment more broadly. Instead, these provisions focus on specific high-performance artificial intelligence (AI) chips.

B. Exclusions Supporting the U.S. Technology Supply Chain

In addition, the Proclamation provides important use-based exclusions. Therefore, the 25% tariff does not apply to Covered Products imported to support the build-out of the U.S. technology supply chain. For example, these include imports:

• For use in U.S. data centers
• For repairs or replacements performed in the United States
• For research and development activities in the United States
• For use by startups
• For non-data-center consumer applications
• For non-data-center civil industrial applications
• For U.S. public sector applications
• For other uses that the Secretary of Commerce determines contribute to strengthening U.S. technology supply chains or domestic manufacturing capacity

C. Interaction with Export Controls on Advanced Semiconductors

Simultaneously, this development coincides with revisions by the Bureau of Industry and Security (BIS) to its license review policy. Specifically, the revised policy applies to exports of certain advanced semiconductors to China and Macau, including Nvidia H200-class chips and equivalent products. As a result, commentators have observed that, taken together, these measures effectively impose a 25% cost burden on certain exports of high-performance AI chips. For instance, these include Nvidia H200-class and AMD MI325X-class products. Although the tariff applies legally at import rather than export, the commercial effect, nevertheless, remains significant. Furthermore, this approach aligns with President Trump’s 8 December announcement that Nvidia and AMD would need to pay 25% of AI chip sales to China. Importantly, the structure avoids the legal and constitutional constraints associated with a direct export tax.

2. Stacking and Interaction with Other Tariffs

Under the Proclamation, imports of Covered Products remain subject to the 25% duty in addition to other applicable tariffs, unless, the Proclamation expressly provides otherwise. Specifically, where a Covered Product would otherwise fall under multiple Section 232 tariffs—such as those applicable to steel, aluminum, copper, or automotive products—the Proclamation applies only the semiconductor-specific Section 232 tariff.

Moreover, the Proclamation also excludes Covered Products from tariffs imposed under Executive Order 14257 of 2 April 2025. That order, in turn, introduced worldwide reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA). Consequently, no duty drawback is available.