The Trump administration is considering a major expansion of chip tariffs that would extend duties beyond semiconductors to laptops, gaming consoles, and data center servers, according to eight sources familiar with the talks. This second wave of tariffs could eliminate exemptions granted in January's 25% duty on advanced accelerators, fundamentally reshaping how U.S. companies source and build technology infrastructure.

What Would Change Under the New Tariff Structure?

Commerce Secretary Howard Lutnick is reportedly favoring a framework that would cap duty-free chip imports based on each company's committed U.S. production levels. The current exemptions, which protect data centers, research and development, startups, repairs, and consumer devices, may not survive this new round. A phase-in period is under discussion, though the framework could still shift substantially in the coming weeks.

The January action, formally known as Proclamation 11002, imposed a 25% duty on a narrow set of advanced accelerators, specifically naming Nvidia's H200 and AMD's MI325X in the accompanying White House fact sheet. That action was explicitly labeled Phase 1, signaling that additional measures were planned. The Commerce Department was directed to report to the president by July 1 on the semiconductor market for U.S. data centers, and a separate April 14 report from the U.S. Trade Representative (USTR) and Commerce covered tariff negotiations with Taiwan, South Korea, and Japan.

How Would These Tariffs Affect Major Tech Companies and Infrastructure?

• Data Center Buildout: The tariffs could add unpredictability and cost to the massive infrastructure investments hyperscalers like Amazon, Google, and Meta are making during a record artificial intelligence spending cycle, potentially slowing deployment of AI systems.
• Manufacturing Capacity Mismatches: Taiwan produces more than 90% of the world's leading-edge chips, yet Taiwan's January trade agreement allows zero tariffs on Taiwanese chips only within 2.5 times a company's current U.S. manufacturing capacity while new plants are under construction, tightening to 1.5 times once they're built.
• Timeline Pressures: One person involved in the talks put the domestic manufacturing build-out at more than five years, longer than any phase-in period the administration has allowed on previous tariff rounds, creating a significant gap between policy timelines and industrial reality.

Taiwan Semiconductor Manufacturing Company (TSMC) has committed $265 billion to its Arizona site, the largest foreign direct investment in U.S. history, yet projects only around 30% of its most advanced capacity there at full build-out. Industry representatives argued in the talks that a quota keyed to current domestic capacity cannot cover the volumes hyperscalers are purchasing during this period of intense AI infrastructure investment.

"Building the transcontinental railroad," said Jonathan McHale, digital policy chief at the Computer and Communications Industry Association, comparing the data center buildout and noting that added cost and unpredictability put that investment at risk.

Jonathan McHale, Digital Policy Chief at the Computer and Communications Industry Association

The Computer and Communications Industry Association's members include Amazon, Google, and Meta, companies that would be directly affected by expanded tariffs on data center equipment. Tech lobbyists have met with Lutnick and Bureau of Industry and Security undersecretary Jeffrey Kessler with growing frequency since the start of summer, but three of the sources said recent talks moved against the industry's interests.

Why Is the Administration Pursuing This Strategy?

White House spokesperson Kush Desai defended the approach by stating that reshoring chip manufacturing is a top priority for the president. The administration's logic centers on building domestic semiconductor production capacity to reduce reliance on Taiwan and other foreign suppliers, a goal that has bipartisan support in Congress but faces significant practical challenges from the technology industry.

The timing of these discussions matters because the administration is weighing whether to proceed with the expansion before the phase-in period from January's tariffs expires. The Commerce Department did not respond to requests for comment on the specifics of the proposal, leaving industry stakeholders uncertain about the final shape of any new tariffs.

The broader context includes China's own efforts to build domestic chip supply chains, which could accelerate if U.S. tariffs make foreign chips more expensive or harder to access. The administration's strategy appears designed to force investment in U.S. manufacturing, but the timeline mismatch between policy expectations and industrial capacity raises questions about whether the approach will achieve its intended goals or simply increase costs for U.S. companies and consumers.