Semiconductor Exempt in US National Emergency Tariff Declaration

The US government has taken a significant step by declaring a national emergency to impose tariffs on a wide range of items entering the country, effective immediately. This move, however, comes with exceptions, as semiconductors and certain critical raw materials essential for making chips and batteries have been granted exemption from these tariffs.

Under the new regulations, a chart detailing the tariff rates has been released to provide clarity on the impact of these measures. The Trump administration has invoked the International Emergency Economic Powers Act of 1977 (IEEPA) and the National Emergencies Act to address the national emergency arising from the substantial and persistent trade deficit, driven by factors such as the lack of reciprocity in trade relationships and harmful practices like currency manipulation and exorbitant value-added taxes (VAT) imposed by other countries.

As part of the implementation, a blanket 10% tariff will be imposed on most items, with the exception of vehicles, which will face a higher tariff rate of 25%. The United Kingdom is set to experience the baseline 10% tariff, while the European Union will be subject to a 20% tariff. However, details regarding any reciprocal tariffs from these regions are yet to be disclosed.

Notably, countries like China, India, Vietnam, Cambodia, Malaysia, Thailand, and Serbia will face varying degrees of tariffs, with rates ranging from 27% to 49%. Despite these changes, certain companies like Serbian board maker MikroElektronika and chip maker Infineon Technologies will remain unaffected, as their products fall under the exempted categories.

The decision to impose tariffs is partly motivated by national security concerns, particularly in the defense industry. The administration highlighted the importance of maintaining adequate stockpiles of military goods to safeguard national defense interests. To achieve this, the US aims to bolster its manufacturing capabilities in critical sectors such as bio-manufacturing, batteries, and microelectronics, essential for meeting defense requirements.

Selected Countries and Territories Reciprocal Tariff

• Bosnia and Herzegovina 36%
• Brunei 24%
• Cambodia 49%
• China 34%
• EU 20%
• Falkland Islands 42%
• India 27%
• Indonesia 32%
• Israel 17%
• Japan 24%
• Malaysia 24%
• Norway 16%
• Serbia 38%
• South Africa 31%
• South Korea 26%
• Switzerland 32%
• Taiwan 32%
• Thailand 37%
• Vietnam 46%