Tariffs and trade deals: How they impact chip pricing

In early August 2025, Taiwan’s Ministry of Economic Affairs confirmed that the U.S. would impose a provisional 20% tariff on finished semiconductor imports. The duties, applied under Section 232, likely don’t represent a final number as negotiations continue.  

Crucially, however, semiconductor manufacturing equipment was left off the table. Advanced tools such as lithography systems, etchers, and cleanroom infrastructure were explicitly exempted following last-minute negotiations with South Korea, Malaysia, and the European Union.  

This distinction is massive for manufacturers. Without exemptions, fab operators would have faced an immediate 20% increase in capital costs on new equipment orders, jeopardizing expansion plans already underway. Instead, the burden has shifted primarily onto finished chips and raw material inputs like copper, where buyers will now contend with higher costs.  

The latest tariffs represent a two-track reality for the chip sector. Though equipment costs remain stable, component and material pricing are moving higher, inviting more market volatility in their wake.  

The genesis of the latest U.S. tariffs  

The latest tariffs are rooted in a Section 232 national security investigation conducted by the U.S. Department of Commerce. When the results were released on July 27, officials cited unfair foreign subsidies and risks to national security due to an overreliance on imported technology while recommending steep duties on finished chips and a selection of raw materials.  

The response in Washington was swift as the Trump administration rushed to impose a 20% levy on both finished Taiwan-made chips as well as raw copper imports. However, pharmaceutical inputs and semiconductor machinery were left untouched for the time being.  

By July 30, news surfaced that a new trade deal between the U.S. and South Korea would spare capital equipment from duties. On August 1, Taiwan clarified that chips remained squarely within the scope of the new tariff regime but clarified that it plans to negotiate a lower rate in the days to come. Malaysia, at the same time, announced exemptions for its fabrication tools and EDA software.  

By invoking Section 232 to justify tariffs on both chips and strategic inputs, Washington signaled a broader strategy to isolate critical supply chain vulnerabilities while still supporting domestic production capacity. Despite the concessions for chip manufacturing equipment, though, many firms claim the impact is still significant as prices rise and questions about availability linger.  

Trade deals carve out critical exemptions  

Fast-moving diplomacy has proven vital to avoiding disruption of the worst-case scenario. Under the U.S.-South Korea agreement, manufacturers like Samsung and SK Hynix retained the ability to import advanced chipmaking tools without penalty. Similarly, Malaysia secured relief for both fabrication equipment and EDA software, shielding key Penang fabs from tariffs.  

A separate deal between the U.S. and EU saw extended capital expenditure exemptions for all member nations. Although raw material duties remain in place, the equipment relief helps balance the table.    

Ironically, these exceptions were announced just days after the U.S. loosened certain AI-related export restrictions destined for China, including Nvidia’s high-end GPUs. The move came as a surprise to many given Washington’s long-held stance of limiting Chinese AI ambitions through tough trade measures.  

Impacts on availability and pricing trends  

The immediate effect of the U.S. semiconductor tariffs is a two-tier cost structure that creates either stability or turbulence depending where organizations fall on the supply chain. At one end, capital equipment exemptions have preserved the economics of fab expansion. Manufacturers can now move forward confidently with their planned investments in lithography systems, deposition tools, and facility upgrades.  

However, finished chips and critical inputs now carry significant new cost burdens. Those ramifications are already being felt in the markets.  

Chip distributors have little choice but to pass higher tariff-linked costs down the chain. As a result, analysts project an 8-12% rise in spot market prices over the coming quarter. This will strain already tight margins for OEMs and other buyers, particularly in sectors like automotive and consumer electronics where cost competition is fierce.  

Meanwhile, Section 232 duties on copper imports are expected to add an additional $0.15 to $0.20 per pound to buyer costs. For a commodity so crucial to the semiconductor industry, this increase carries significant weight. Experts predict a cascading rise in costs that will reverberate beyond chips to affect nearly every downstream electronics segment.  

The divergence seen in the fallout of the latest U.S. tariffs puts a spotlight on the difficulty of managing supply chains in today’s heavily politicized market. Organizations must grapple with bother higher direct costs as well as uncertainty created by inconsistent exemptions.  

As one procurement director recently observed, navigating tariff exposure now feels like “untangling a spiderweb of madness.” As goods cross multiple borders, and each stop carries the risk of additional duties and exemptions, the sentiment is hard to disagree with. Trying to determine the cumulative tariff costs of a finished product or key input is more convoluted than ever.  

Why the baseline is shifting and volatility endures  

Even with equipment spared, the industry’s cost baseline is no longer what it was. Tariffs on finished chips and copper have effectively reset the floor on semiconductor pricing. However, what makes the current environment challenging is not the tariffs themselves, but the constant threat of new measures being layered on top of existing duties. This dynamic has ensured that volatility is the defining force in the market.  

Negotiations between Washington and Beijing this summer illustrate the predicament. Talks ended without resolution on specialty chemicals or AI-related software. Both categories remain under review for potential tariff action, leaving uncertainty for chipmakers even when other areas were successfully negotiated.  

For OEMs, CMs, and EMS providers, the lack of clarity makes it difficult to forecast costs beyond a single quarter, forcing more organizations into defensive, short-term procurement strategies.  

Solutions & best practices  

In today’s tariff-driven market, resilience can only be achieved by treating volatility as permanent. The most successful organizations are diversifying their supply channels through distributed with multi-region franchise agreements, ensuring access to authentic components even as duties shift by utilizing alternative channels.  

Real-time intelligence is equally critical. A supplier that operates a 24/7 global intelligence desk staffed by regional professionals who understand specific pain points can monitor regulatory updates and give procurement teams time to adjust BOMs or renegotiate contracts before costs escalate.  

Above all, strong supplier and distributor partnerships remain an essential buffer, opening paths to exemptions and alternate sourcing when policy changes arrive without warning.  

The path forward  

With U.S. semiconductor tariffs reshaping costs and trade deals offering only partial relief, executives can no longer rely on stable pricing baselines. The next disruption will come, and preparation is the only defense. Now is the time to stress test BOMs, validate capex plans, and secure alternative channels before lead times tighten.  

Sourceability’s regional professionals, global sourcing team, and franchise partnerships provide the visibility and flexibility needed to help you secure the products you need while staying informed of the latest tariff developments. Schedule a consultation to build a comprehensive mitigation strategy and secure an uninterrupted supply.

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