Trump imposes 25% tariff on Nvidia and AMD chips to secure share of China sales

Donald Trump has announced new tariffs on Nvidia and AMD chips as part of a strategic plan to implement an agreement requiring technology giants to hand over a 25% share of revenue from AI processor sales to China.

The White House move is designed to formalize a deal struck between the US president and chipmakers to permit the shipment of advanced artificial intelligence hardware. In December, the White House announced an agreement that would allow Nvidia to begin shipping H200 chips to China, reversing a previous policy that banned the export of high-end AI hardware—provided the government received a 25% cut of the sales.

The new US tariffs on specific chips, announced Wednesday, were engineered to ensure these payments are made to the American government and to insulate the unusual arrangement from legal challenges, according to several industry executives. The move effectively allows the government to profit from a shift in export controls.

“Basically, we’re going to make 25% on the sale of these chips. So we’re letting them do it, but the US takes 25% of the dollar value of the chips. I think it’s a very good deal,” Trump said during an announcement in the Oval Office on Wednesday.

According to a White House briefing note, the new 25% tariff will apply to chips such as Nvidia’s H200 and rival AMD’s MI325X model that are first imported into the US and then “re-shipped” to customers worldwide. It will also cover other US companies seeking to send AI chips abroad.

Nvidia welcomed the move on Wednesday, stating that Trump’s policy “strikes a thoughtful balance that is very good for America.” AMD stated that it complies with all US export laws and policies.

Nvidia and most of its US peers rely on Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan to produce the chips they design, including the H200, an advanced AI processor from an older generation of Nvidia hardware.

According to a presidential proclamation released Wednesday afternoon, tariffs will not be applied to chips imported into the US for the purpose of building the nation’s domestic AI infrastructure.

The new levies come as part of a sweeping national security investigation launched by the Trump administration early last year, which rattled global markets as the president initiated a trade war against major US trading partners.

These so-called Section 232 tariffs rest on a different legal footing than the emergency powers Trump has invoked to implement other global taxes, which are currently facing a challenge pending in the Supreme Court.

However, Wednesday’s proclamation warned that the second phase of the national security investigation could lead to “broader tariffs on imports of semiconductors and their derivative products.”

Trump has threatened to impose tariffs of up to 100% on chips; however, over the past year, he has offered exceptions and exemptions to companies that commit to establishing more production capacity within the US.

The investigation found that US chipmaking capacity was “inadequate to meet domestic demand,” leaving the country “dependent on foreign sources.”

Early last year, Nvidia CEO Jensen Huang committed the company to spending half a trillion dollars over the next four years to manufacture its products in the US, responding to the Trump administration’s push to bring advanced electronics manufacturing onshore.

TSMC is currently constructing new production facilities in Arizona as part of a $165 billion investment project. In October, the new facility began producing Nvidia’s most advanced Blackwell chips for the first time.

However, the vast majority of the world’s most advanced chips are still manufactured in Taiwan before being sent elsewhere for packaging or integration into servers and devices.

The White House also announced the results of a long-awaited investigation into critical minerals, concluding that reliance on imported metals poses a national security threat because these materials are “embedded throughout defense and commercial supply chains.”

Trump instructed Commerce Secretary Howard Lutnick to negotiate agreements involving “trade-restrictive measures,” such as floor prices for metals including gallium, germanium, and rare earth elements.

The decision does not include the immediate imposition of tariffs on these materials, which are widely used across sectors including technology, energy, and defense. However, the White House stated that if agreements are not reached within 180 days, the president may take further steps to address the risks.

China dominates the markets for numerous critical minerals, including rare earths, and has leveraged this advantage in recent months by restricting access.