How the Trump tariffs on Taiwan chips could hurt the AI trade — and the likes of Nvidia

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Posted on 11/26/2024 4:05:54 AM PST by RoosterRedux

President-elect Donald Trump made raising tariffs on imported goods a tenet of his reelection campaign. And while that could raise prices on everything from jeans to children’s toys for everyday Americans, Trump has also floated the idea of another tariff that could impact Wall Street’s current favorite trade: AI.

During an appearance on Joe Rogan’s podcast ahead of the election, Trump lambasted the idea of the CHIPS Act, a bipartisan piece of legislation Biden signed in 2022 designed to bring semiconductor manufacturing back to the US. He called it “so bad.”

Instead of using legislation and billions in subsidies to bring chip-building facilities to the US, Trump said tariffs would have the same effect. In Trump’s estimation, putting tariffs on semiconductors from Taiwan would force chip builders, like TSMC, to construct chip manufacturing plants, or fabs, in the US to avoid having to pay the added tax.

But there’s no guarantee chip builders wouldn’t simply move the added cost down the line to their customers and forego spending cash on expensive US facilities.

Such a move could also end up cutting into profit margins for companies like Nvidia (NVDA) and AMD (AMD), which rely on chips built in Taiwan, unless they similarly pass those costs down to their own customers. And that could have ripple effects across the tech industry.

“If the argument is that this is the way to force it to move here, TSMC is already moving here,” explained William Reinsch, a senior adviser with the Center for Strategic and International Studies. “They're already building a fab plant in Arizona. That's all already underway and the tariffs aren't going to make that move any faster. If anything, they might complicate the effort.”

(Excerpt) Read more at finance.yahoo.com ...

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1 posted on 11/26/2024 4:05:54 AM PST by RoosterRedux

To: All

2 posted on 11/26/2024 4:07:15 AM PST by RoosterRedux (Emerson (paraphrased): "If you strike at the king, don't fail." The Democrats failed. )

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