Trump Administration Considers Ratio-Based Tariff Policy for Semiconductor Imports

The Trump administration is reportedly considering a ratio-based tariff policy that would require U.S. semiconductor companies to manufacture the same number of chips domestically as their customers import from overseas manufacturers. According to The Wall Street Journal, companies failing to meet this 1:1 ratio would face tariffs, though the specific timeline for achieving compliance remains unclear. This approach represents an unusual strategy for boosting domestic chip production, as it could potentially penalize the U.S. chip industry during the ramp-up period before sufficient manufacturing capacity comes online.

The policy faces significant practical challenges given the lengthy timelines required for semiconductor manufacturing facilities. Intel's Ohio plant, originally scheduled to open in 2024, has been delayed multiple times and now targets a 2030 launch date. Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) committed $100 billion over four years for U.S. chip production infrastructure in March, though details remain limited. These delays highlight the complex reality of establishing domestic chip manufacturing capabilities that could meet the proposed ratio requirements.

While the ratio-based approach could eventually increase domestic semiconductor production, it risks hurting the U.S. chip industry in the short term by imposing tariffs before adequate manufacturing capacity exists. The semiconductor industry requires substantial time and investment to scale production, making immediate compliance with a 1:1 ratio challenging for most companies. This policy continuation of Trump's broader semiconductor tariff discussions that began in August, representing a significant shift in how the administration approaches reshoring critical technology manufacturing.