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WASHINGTON — Former President Donald Trump declared on Sunday his administration would unveil the tariff rate on imported semiconductors within the coming week. He indicated potential flexibility for select companies within the industry regarding these new trade measures on crucial electronic components.
New Tariffs on Semiconductors and Electronics
This declaration from the former president suggests the prior exemption of smartphones and computers from reciprocal tariffs on goods from China may be temporary, as the administration aims to reshape commerce within the semiconductor sector.
“Our intention was to simplify matters for numerous businesses, as we aspire to manufacture our chips, semiconductors, and related products domestically,” Trump stated to journalists aboard Air Force One while en route back to Washington from his Palm Beach, Florida residence.
While not confirming whether specific products, such as smartphones, might still receive exemptions, Trump commented, “Some degree of adaptability is necessary. Excessive rigidity is not advisable.”
National Security Investigation into Semiconductor Trade
Earlier that same day, the former president had declared a national security investigation into trade practices impacting the semiconductor industry.
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“We are scrutinizing Semiconductors and the ENTIRE ELECTRONICS SUPPLY CHAIN as part of upcoming National Security Tariff Investigations,” he conveyed in a social media post.
Earlier, the White House had communicated exemptions from significant reciprocal tariffs on Friday, raising hopes that the technology sector might avoid entanglement in the growing trade tensions between the two nations, and that common consumer electronics like phones and laptops would maintain their affordability.
Industry Concerns and Market Volatility
However, Howard Lutnick, then serving as Commerce Secretary under Trump, clarified earlier on Sunday that vital technology goods from China, alongside semiconductors, would still be subjected to distinct, newly imposed duties within approximately the next two months.
Uncertainty around Trump’s tariff policies last week incited the most volatile fluctuations on Wall Street observed since the 2020 Covid-19 pandemic. The benchmark Standard & Poor’s 500 index has decreased by over 10% since Trump assumed office on January 20th.
Lutnick elaborated that Trump intended to implement a “specialized tariff approach” targeting smartphones, computers, and other electronic items in the near future, potentially within one to two months. These would be in addition to sector-specific tariffs aimed at semiconductors and pharmaceuticals. He indicated these new levies would be separate from the previously announced reciprocal tariffs, which had already elevated duties on certain Chinese imports to 125% the preceding week.
“He is indicating they are exempt from the reciprocal tariffs,” Lutnick stated during a televised interview on Sunday, “however, they are encompassed within the semiconductor tariffs, which are expected to be implemented possibly within a month or two.” He further predicted these levies would incentivize the domestic production of these goods within the United States.
China’s Response and Trade Tensions
In response, Beijing had already increased its own tariffs on U.S. imports to 125% on Friday. On Sunday, prior to Lutnick’s remarks, China stated that they were assessing the repercussions of the exclusions for technology products that had been implemented late on Friday.
China’s Ministry of Commerce commented, invoking a proverb: “The bell on a tiger’s neck can only be untied by the person who tied it,” implying the trade dispute’s resolution rests with its initiator.
Calls for Tariff Pause and Industry Reactions
Billionaire investor Bill Ackman, a supporter of Trump’s presidential campaign yet critical of the tariffs, urged on Sunday for a three-month suspension of the substantial reciprocal tariffs on China, similar to a pause previously enacted by Trump for most other nations the previous week. Ackman suggested on social media platform X that if Trump were to temporarily suspend Chinese tariffs for 90 days and reduce them to 10%, “he would attain the same goal of prompting U.S. companies to shift their supply chains away from China, but without the associated disruption and risks”.
Sven Henrich, founder and chief market strategist at NorthmanTrader, voiced strong disapproval on Sunday regarding the handling of the tariff matter. Henrich posted on social media platform X, “Sentiment check: The most significant market rally of the year would occur the day Lutnick is dismissed.” He added, “I propose the administration determine who is in control of the messaging, whatever that message may be, as it is constantly changing. American businesses are unable to strategize or invest amidst this continuous uncertainty.”
Economic Impact and Political Commentary
U.S. Senator Elizabeth Warren, a Democrat, criticized the latest adjustments to Trump’s tariff strategy. Economists have warned that this approach could negatively impact economic growth and contribute to inflation. Warren stated in a televised interview on Sunday, prior to Trump’s most recent social media communication, “There is no coherent tariff policy—only disarray and malfeasance.”
Late Friday, U.S. Customs and Border Protection authorities released a listing of tariff codes that would be excluded from import duties. This listing encompassed 20 product classifications including computers, laptops, disc drives, semiconductor components, memory chips, and flat panel displays.
During an interview on NBC News’ “Meet the Press,” White House Trade Advisor Peter Navarro mentioned that the U.S. had extended an invitation to China for negotiations. However, he also expressed criticism regarding China’s link to the illicit fentanyl supply chain and notably omitted China from a list of seven entities—the United Kingdom, the European Union, India, Japan, South Korea, Indonesia, and Israel—with whom he stated the administration was engaged in discussions.
Trade Representative Jamieson Greer stated during a television appearance on Sunday that as of then, there were no scheduled discussions between Trump and Chinese President Xi Jinping concerning tariffs. He accused China of instigating trade tensions by imposing retaliatory levies. However, he did express optimism regarding potential trade agreements with nations other than China.
Greer stated, “My objective is to secure significant agreements within 90 days, and I anticipate we will achieve this with several countries in the coming weeks.”
Recession Concerns
Ray Dalio, billionaire founder of the world’s largest hedge fund, conveyed to “Meet the Press” his apprehension that the United States might be heading towards a recession, or potentially a more severe economic downturn, as a consequence of the tariffs.
Dalio concluded on Sunday, “Currently, we are at a critical juncture and very close to entering a recession. I am concerned about a potentially worse economic outcome if this situation is not managed effectively.”