President Donald Trump says he's imposing a 100% tariff on computer chips— a move that raises the specter of higher prices for electronics, autos, household appliances and other essential goods that depend on the processors.
The real problem seems to be that none of the news articles try to dig into what Trump’s vague and ambiguous wording actually means. They just report his nonsense verbatim. Does “building in the USA” mean building chips or building products containing chips?
The tariffs only apply to the imported products. That’s how tariffs work. If you import components into a US product then you only pay the tariff on those components, not the entire product.
It’ll probably be 100% tariff for the chip, and whatever the rate is for that country on the rest of the product. That’s assuming they go into that much detail, because if they don’t, it would be easy to dodge.
Right, but a microchip is quite a different beast than raw steel. Nobody is going to buy a muffler to melt down to produce something else, but they might buy a PC to scavenge for parts. It’s relatively easy to pull a chip off a board, whereas reforming steel is a lot more intensive.
Pretty sure that’s their point. Say a product costs $100 dollars with no tariffs. If you import the product from the EU with a 15% tariff, it’s now $115 with tariffs (assuming no tariffs importing the chips into the EU). If you manufacture the product in the US, you need to pay 100% tariffs for all the chips. Obviously the impact depends on how much the chips cost relative to the entire product, but if the chips are half the cost ($50), then with a 100% tariff you’re now paying $150 for the product manufactured in the US.
Looking into it, the US implementation goes down into the components, so yes. Except, I believe it’d be $50 chip @ 100%, other components at whatever tariff rates they may have, and then the 15% per-country/region tariff applies to all of it on top. So if the other components have no tariffs, it’d be $172.50. I’m now wondering how expensive everything would end up if you have tariffs on materials as well.
In any case though, it becomes ludicrously expensive no matter what because you’re at most dodging the 15%.
EDIT: You can also dodge some of the tariffs if some percentage of the product is made in the US. I wonder if you’d be able to dodge the chip tariff if the materials for it were partially sourced from the US. If possible, that’d probably be cheaper for companies than actually trying to manufacture chips here.
EDIT 2: Actually your calculation may be right, I’m having a hard time finding how they’re actually meant to be calculated. Admittedly it seems a bit weird to me that the rate would override the country-specific rate and thus be the same for chips from the EU and China, but I suppose none of this makes sense in the first place.
Yeah, I’m guessing if you just imported the wafers but did packaging in the US, you could probably get an exception. But I’m not well-versed in the law to know.
Its really fucking lame to label everyone you don’t understand as a “troll/bot”.
I don’t know how many ways there are to explain that tariffs only impact imported goods. If it’s manufactured in the US, there is no tariff. This is, in fact, how tariffs work.
My dude, the chips aren’t manufactured in the US. If the tariffs don’t apply to the chips that are inherently imported from outside the US since basically only TSMC and Samsung make them at this point, then there is no tariff at all. Companies in the US import the chips, then use the imported chips as part of their products. All the companies in the US do is assemble the imported parts (and sometimes not even that).
EDIT: Ah, there was a miscommunication. I think we’re both saying the same thing at this point. Well, mostly the same, since this doesn’t really help US companies and just drives up prices for everything.
Sounds like you can save 85% by putting some googly eyes on the chip and calling it a finished product. It’s Chippy, the pointy pet that fits in your pocket.
Why wouldn’t I be serious? If they’re manufactured outside the US then they’re obviously not manufactured in the US?
I believe they’re referring to products made in the USA that contain chips.
As in importing chips would be 100% but importing a product that contains chips would be 15%?
The real problem seems to be that none of the news articles try to dig into what Trump’s vague and ambiguous wording actually means. They just report his nonsense verbatim. Does “building in the USA” mean building chips or building products containing chips?
The tariffs only apply to the imported products. That’s how tariffs work. If you import components into a US product then you only pay the tariff on those components, not the entire product.
Right.
Isn’t that in agreement with OP? Any products made in USA that contain chips will cost more to make due to the 100% tariff on the chips.
No, OP said it only applied to US products. It’s applied to all imported products. That’s what a tariff is.
So any product containing chips will have a 100% tariff applied?
Edit: product imported to the USA
It’ll probably be 100% tariff for the chip, and whatever the rate is for that country on the rest of the product. That’s assuming they go into that much detail, because if they don’t, it would be easy to dodge.
I import exhaust parts made from steel. They are tarriffed as exhaust parts. Raw steel has its own import HTS code.
Right, but a microchip is quite a different beast than raw steel. Nobody is going to buy a muffler to melt down to produce something else, but they might buy a PC to scavenge for parts. It’s relatively easy to pull a chip off a board, whereas reforming steel is a lot more intensive.
Yes, and since those products are only imported, it won’t affect US products, like I said.
Pretty sure that’s their point. Say a product costs $100 dollars with no tariffs. If you import the product from the EU with a 15% tariff, it’s now $115 with tariffs (assuming no tariffs importing the chips into the EU). If you manufacture the product in the US, you need to pay 100% tariffs for all the chips. Obviously the impact depends on how much the chips cost relative to the entire product, but if the chips are half the cost ($50), then with a 100% tariff you’re now paying $150 for the product manufactured in the US.
Surely the tariff would apply separately, so the imported cost would be $157.50 ($50 chip @ 100% tariff + $50 everything else @ 15% tariff).
If they didn’t apply separately, the tariff would be trivial to dodge.
Looking into it, the US implementation goes down into the components, so yes. Except, I believe it’d be $50 chip @ 100%, other components at whatever tariff rates they may have, and then the 15% per-country/region tariff applies to all of it on top. So if the other components have no tariffs, it’d be $172.50. I’m now wondering how expensive everything would end up if you have tariffs on materials as well.
In any case though, it becomes ludicrously expensive no matter what because you’re at most dodging the 15%.
EDIT: You can also dodge some of the tariffs if some percentage of the product is made in the US. I wonder if you’d be able to dodge the chip tariff if the materials for it were partially sourced from the US. If possible, that’d probably be cheaper for companies than actually trying to manufacture chips here.
EDIT 2: Actually your calculation may be right, I’m having a hard time finding how they’re actually meant to be calculated. Admittedly it seems a bit weird to me that the rate would override the country-specific rate and thus be the same for chips from the EU and China, but I suppose none of this makes sense in the first place.
Yeah, I’m guessing if you just imported the wafers but did packaging in the US, you could probably get an exception. But I’m not well-versed in the law to know.
Incorrect. Once again, tariffs are only for imported products. That’s how tariffs work.
I’m convinced you’re a troll/bot. That is not in fact how tariffs work since the chips are not made in the US.
Its really fucking lame to label everyone you don’t understand as a “troll/bot”.
I don’t know how many ways there are to explain that tariffs only impact imported goods. If it’s manufactured in the US, there is no tariff. This is, in fact, how tariffs work.
My dude, the chips aren’t manufactured in the US. If the tariffs don’t apply to the chips that are inherently imported from outside the US since basically only TSMC and Samsung make them at this point, then there is no tariff at all. Companies in the US import the chips, then use the imported chips as part of their products. All the companies in the US do is assemble the imported parts (and sometimes not even that).
EDIT: Ah, there was a miscommunication. I think we’re both saying the same thing at this point. Well, mostly the same, since this doesn’t really help US companies and just drives up prices for everything.
Sounds like you can save 85% by putting some googly eyes on the chip and calling it a finished product. It’s Chippy, the pointy pet that fits in your pocket.