The chip shortage has been at the top of mind over the last week after the launch of DeepSeek, a novel AI service intended to compete with ChatGPT. Semiconductor manufacturers have left the US and previous plans to attract domestic production have failed. President Donald Trump has proposed a new idea to force production back to the states through tariffs.
The CHIPS and Science Act launched under the Biden Administration injected $52 billion into American chip manufacturing. Intel was awarded $7.9 billion in 2024 to boost factories in Ohio, Oregon, New Mexico, and Arizona. Still, these incentives have not been sufficient to attract new chip manufacturers to the US, with the bulk residing in Taiwan.
Trump believes that throwing cash at companies is not enough to boost domestic production. “They’re gonna build their factory with their own money. We don’t have to give them money,” Trump added, later claiming: “They’re giving the money, they don’t even know what they’re going to do with it.” Instead, he is proposing tariffs between 25% to 100%, believing companies will come to the US to avoid these impossible taxes.
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