The new tariffs on Taiwan haven't impacted NVIDIA's AI supply chain yet, but they could have a massive influence in the future if the US decides to impose chip-specific taxes.
Taiwan Is Currently Relieved From Chip Tariffs, But They Could Go Up To 50% If a Trade Deal Isn't Reached
Well, it seems like the next big hurdle for the AI industry is seeing a deal being reached between the US and Taiwan, given that the latter is responsible for a large portion of the AI supply chain. Taiwanese server suppliers, such as Foxconn, Wistron, and Quanta, account for a significant portion of the production of NVIDIA's AI hardware; hence a tariff on them means that the AI markets will witness a massive shakeup in the price segment. However, according to Taiwanese media, it is claimed that the newly imposed 20% tariffs on Taiwan doesn't effect semiconductors or AI for now.
It is reported that the Taiwan tariffs right now only target around 25% of exports to the US, and it exempts semiconductors, consumer electronics, and AI servers, so for the likes of NVIDIA and AMD, this is good news, temporarily. The threat of tariffs still looms under Section 232, which the US is currently evaluating. For those unaware of what this means, the section is responsible to restrict imports of goods that pose a threat to national security, and interestingly, chips and AI equipment have made their way into the list of things that are a threat to the US.
We won't speculate on the probability of chip tariffs on Taiwan, but judging from what President Trump has expressed about the chip nation in the past, the US seems to be determined to take trade negotiations with Taiwan seriously. One of the catalysts in securing a better deal would likely be an increased investment from Taiwan in the chip sector, on top of the $165 billion investment announced by TSMC. There are rumors that Intel could be involved in the trade deal as well, which shows that America is looking for a complete access to Taiwan's chip technologies.
It would be interesting to see how the situation evolves between the US and Taiwan, but it seems like chip tariffs under Section 232 are very much a possibility. These could put tariff rates somewhere between 20% and 50% and snatch away a hefty portion of NVIDIA's profit margins.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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