US President Donald Trump has repeatedly threatened steep tariffs on semiconductors and electronics. However, those tariffs do not take effect simply because he says they will.
The legal authority Trump relies on is Section 232 of the Trade Expansion Act, which allows the President to impose import restrictions on national security grounds. That authority, however, is conditional.
It can only be exercised after a formal investigation by the US Department of Commerce (DOC) and a subsequent presidential determination based on the findings of that investigation.
Under Section 232, ‘national security’ has been interpreted broadly. It extends beyond military readiness to include domestic industrial capacity, supply-chain concentration and the ability to supply defence or other critical industries during a national emergency.
Tariffs under this framework are instruments designed to alter market incentives by raising the cost of imports, supporting domestic producers and creating leverage to shift production or sourcing decisions.
As a result, any tariff Trump has publicly endorsed—including the 26% tariff on India announced last April, the reciprocal 50% tariff announced in August or the proposed 500% tariff on Russia and countries that purchase Russian oil—can only be applied to industries that the DOC determines pose a national security risk under Section 232.
Tariffs are applied selectively, not universally.
Where the Semiconductor Investigation Stands Today
On April 1, 2025, the DOC formally initiated a Section 232 investigation into semiconductors, the equipment used to manufacture them and the products made with them.
The process included a public comment period and submissions from industry participants.
By statute, the DOC has 270 days to submit its findings. The President then has an additional 90 days to decide whether to act and to specify the nature of any trade restrictions.
That process has not yet concluded, and no findings have been issued.
A Reuters report published in November indicated that officials were not expected to levy semiconductor tariffs in the near term, adding that a final decision was still some distance away.
For now, the technology industry remains unaffected.
This remains true despite Trump’s repeated public warnings to Apple CEO Tim Cook. Trump has said tariffs would follow if production was not moved out of China or India and into the United States, and has also stated that he would impose 100% tariffs on semiconductors while exempting companies that shift manufacturing domestically.
This legislative backdrop sits alongside other policy efforts such as the CHIPS Act, through which the US has deployed subsidies, tax incentives and investment credits to strengthen domestic semiconductor manufacturing, signalling that incentives rather than tariffs are currently the preferred lever to build capacity.
Council on Foreign Relations, a think tank focused on US foreign policy and international relations, noted in a report, “The United States relies heavily on foreign suppliers for these goods (semiconductors, the equipment used to manufacture them and the products made with them), importing over $200 billion more than it exported in 2024.”
At the same time, the report highlighted that Section 232 outcomes are frequently shaped through negotiation.
Liechtenstein, Switzerland and the European Union negotiated a 15% tariff ceiling on semiconductor exports, while Japan secured the lowest tariff rate among countries.
Trump’s meeting with South Korean President Lee Jae Myung last November illustrates this approach. The US committed that any Section 232 terms applied to South Korea would be no less favourable than those offered to countries with comparable trade volumes.
From an Indian context, however, if tariffs are eventually applied to this industry, the impact could be significant.
Apple’s iPhone exports from India crossed $50 billion by December 2025, and 71% of iPhones sold in the US are now made in India.
“Production cycles would face significant disruption. Tech companies plan component orders 6-18 months ahead, and policy uncertainty breaks this entirely,” said Ganesh Krishnan, an entrepreneur and partner at GrowthStory, in an interaction with AIM.
“Relocating isn’t a quick fix either; moving even 10% of the supply chain from Asia to the US would take three years and $30 billion,” he stated.
Krishnanan said the 500% tariff is primarily a negotiating lever against India’s Russian oil purchases, not a serious intent to dismantle the electronics trade. “But uncertainty itself is damaging,” he said, adding that the real concern for big tech companies lies in the conclusions of the investigation.
Industry Inputs and Supply-Chain Economics Matter
The DOC’s investigation process explicitly invites industry input.
Trade associations, manufacturers and downstream users are encouraged to submit evidence and analysis, and a total of 154 comments were submitted in response to the request for public comment.
The Computer & Communications Industry Association (CCIA) said while the US has a “legitimate national security interest in assessing its dependence on foreign suppliers for semiconductors and semiconductor manufacturing equipment,” any policy response must account for the complexity of global supply chains.
This, the body noted, represents “billions of dollars in existing investments by US-based companies and deep commercial relationships built over decades.”
The CCIA warned that broadly applied tariffs would raise costs across the US industry and for consumers and would also “undermine the investments needed to reshore or diversify the supply chain.”
The association argued against “broadly-applied tariffs or import restrictions on the wide array of goods in scope,” urging the DOC instead to focus narrowly on “semiconductors and SME that are critical for national defence and sourced from countries of concern.”
Dell Technologies echoed similar concerns. While supporting efforts to reduce reliance on foreign semiconductor supply chains, the company noted that US manufacturing capacity remains limited and is unable to meet demand at scale in the near term.
Dell argued that the expanding domestic semiconductor production “requires financial and policy facilitative efforts rather than import restrictions,” warning that abrupt trade measures could raise costs, disrupt operations and delay production.
The Information Technology and Innovation Foundation (ITIF) added quantitative context.
While global semiconductor sales were expected to grow in 2025, ITIF warned that moderate to severe tariffs could reverse that trajectory, pushing growth to “as much as a -20% growth rate for the sector in 2025,” potentially wiping out “some $250-300 billion of global semiconductor sales” in a single year.
The analysis cautioned that higher chip prices would cascade through downstream sectors, raising costs for autos, data centres and electronics, and weakening US competitiveness rather than accelerating domestic capacity build-out.
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