Semiconductors Exempt in US National Emergency Tariff Declaration

The US government has recently taken a significant step by declaring a national emergency to impose tariffs on a wide range of items entering the country. This decision, made on a Saturday, comes with exemptions for semiconductors and critical raw materials essential for producing chips and batteries.

Under the new tariff regime, a blanket 10% tariff will be applied to most items, with the exception of vehicles which will face a higher 25% tariff. The Trump administration justified this move by citing the need 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 high value-added taxes in other countries.

Notably, the UK and the European Union will face different tariff rates, with the UK subject to a baseline 10% tariff and the EU facing a 20% tariff. However, specific details on reciprocal tariffs from these regions are yet to be disclosed.

Some of the highest tariffs have been reserved for countries like China at 34%, India at 27%, as well as low-cost manufacturing hubs such as Vietnam at 47% and Cambodia at 49%. Additionally, countries like Malaysia, Thailand, and Serbia will also face significant tariff rates, as outlined in the official chart.

Despite the broad scope of the tariffs, certain companies and industries will remain unaffected. For instance, Serbian board maker MikroElektronika stated that most of their distribution orders fall below the tariff threshold of 800 USD. Similarly, chip maker Infineon Technologies will not be impacted as semiconductors are among the exempted items.

One of the driving forces behind the imposition of these tariffs is the defense industry. The administration highlighted the need to bolster US stockpiles of military goods to align with national defense interests. To achieve this, the US aims to enhance its manufacturing capabilities in critical sectors like bio-manufacturing, batteries, and microelectronics, essential for supporting defense requirements.

It is worth noting that certain critical raw materials crucial for battery production, such as graphite, cobalt, lithium, and niobium, along with materials like pure silicon, silicon carbide, and gallium for wafers, have been exempted from the tariffs. Additionally, all types of semiconductors have also been granted exemptions under the new tariff regulations.

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%