Trump Prepares to Initiate National Security Investigation into Semiconductor Imports

President Donald Trump has pledged to initiate a national security investigation into semiconductor imports. The probe, which is being conducted under Section 232 of the Trade Expansion Act

President Donald Trump announced on Sunday that the U.S. will be launching a national security investigation into semiconductor imports.

The probe, which is being conducted under Section 232 of the Trade Expansion Act, will examine whether the country’s heavy dependence on foreign chips threatens its national security.

If the findings are affirmative, the U.S. could impose tariffs on semiconductors and related technologies.

Most of America’s chips are made in East Asia, specifically Taiwan, South Korea, Japan, Malaysia, and China. Trump’s team argues that this reliance is dangerous, particularly amid escalating global tensions.

The tariffs in question would be applied at a proposed rate of 25% and gradually increased over time. The goal is to encourage companies to manufacture chips in the U.S., where Trump claims they will be safe and under control.

Last Friday, the U.S. government announced a surprising move: a temporary exemption for consumer electronics, smartphones, laptops, and tablets from the latest round of steep mutual tariffs on Chinese imports.

This announcement brought immediate relief to tech giants like Apple (NASDAQ:AAPL), Dell (NYSE:DVMT), and HP (NYSE:HPQ), all of which rely heavily on manufacturing operations in China. For instance, Apple has the majority of its iPhones assembled in factories in China by contractors like Foxconn.

However, President Donald Trump signaled over the weekend that this reprieve is short-lived. In a post on his social media platform on Thursday, Trump stated that they are considering a wide variety of options on Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN for future National Security Tariff Investigations.

If the reports are true, the administration plans to introduce separate tariffs specifically targeting electronics and semiconductors, with an aim to roll them out in the next one to two months, according to Commerce Secretary Howard Lutnick.

Lutnick also clarified in an interview on Sunday that the consumer electronics were previously covered by the reciprocal tariffs but are now included in the new semiconductor and electronics tariff package.

These new tariffs will be applied to high-tech goods deemed critical for national security, encompassing smartphones, computers, medical devices, advanced telecom gear, and pharmaceutical components.

Lutnick further highlighted the administration’s objective to diminish reliance on supply chains in China and incentivize increased production within the United States.

Those critical of the administration’s actions maintain that this move may lead to higher prices on consumer electronics and exacerbate the strain on already taxed supply chains.

But Trump officials counter that the broader, longer-term benefits of economic security and job creation will outweigh the immediate inconveniences.

“We did it before in steel and we’re going to do it again in electronics,” Lutnick said.

Economists and investors have warned that continuing to raise tariffs would damage the U.S. economy.

Billionaire investor Bill Ackman, a political backer of Trump, said the administration’s policy was too aggressive and urged Trump to delay the China tariffs for 90 days and pursue a more limited 10% rate instead.

Ackman said this scaled-back approach would still motivate companies to reduce their reliance on China - without causing widespread market panic.

Market analysts have also raised alarms over potential price increases for consumer electronics like iPhones and laptops. Sven Henrich of NorthmanTrader warned that the costs of new tariffs would ultimately fall on American consumers. He also slammed the administration’s erratic messaging, saying the shifting policies make it impossible for businesses to plan effectively.

Democratic Senator Elizabeth Warren slammed Trump’s tariff strategy, saying it isn’t “a coherent tariff policy — it is chaos.”

China increased its tariffs on U.S. goods to 125% on Sunday in a retaliatory move, its Ministry of Commerce said as it studied U.S. exclusions and threatened further action.

“The bell on a tiger’s neck can only be untied by the one who tied it,” China said in a statement.

It was not immediately clear what the implication was.

The world’s second-biggest economy also said it would continue to closely follow the development of the situation and take further necessary measures.

Earlier this month, China said it would impose additional tariffs of 60-250% on a U.S. product list that included frozen pork, crab, and vegetables, in response to the latest round of U.S. tariffs on $75 billion in Chinese goods.

Those tariffs were due to take effect on Sept. 1 but were later postponed.

The two economic giants have been locked in a protracted trade war since the spring of 2018, when the Trump administration began imposing tariffs on Chinese goods as part of an effort to reduce the U.S. trade deficit with China and open the Chinese market to U.S. goods, services, and investment.

Despite 16 months of tumultuous negotiations, the two sides have yet to reach a comprehensive trade agreement.

Last week, the administration announced