this post was submitted on 06 Aug 2025
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Wouldn't this only affect goods manufactured in the USA? If a finished product containing chips from say, Europe, were to land on USA shores it would only have a 15% tariff right?
Why does trump hate American manufacturing?
It's a tax of 100% on chips being imported to the USA, having been manufactured elsewhere. The idea is that it should force companies to set up their own chip manufacturing in the USA. But that's expensive and slow to do, and requires a lot of specialized engineering talent, so US-based electronics companies will somehow have to survive through years of paying twice as much for the chips they build into their products. This will mean significant price increases for Americans buying electronics, as the unavoidable costs are passed on.
He's been trying to prevent the US from manufacturing their own chips, so that can't be the real goal...
https://www.reuters.com/technology/trump-wants-kill-527-billion-semiconductor-chips-subsidy-law-2025-03-05/
From that article:
I think that, insofar as Trump has a coherent view, that's it: he doesn't want to give companies money to establish chip manufacturing in the USA, because he thinks it can be done instead by bullying them with tariffs so they are forced to fund it themselves if they want to stay in business.
I'm not saying that's a wise view. There's a good chance he just ends up creating more economic problems at home. And it's in part driven by his desire to get revenge on Biden by undoing everything he did, rather than a rational appraisal of economics.
I'm guessing the chip in the finished product would be taxed separately, otherwise it would be trivial to dodge the tariff (just package the chip in a different "finished product" and move it to a US-made product).
You'd guess wrong. Welcome to the wonderful world of tariffs and import/export controls!
I wouldn't call it a trivial dodge because the act of building the tariffed good into another product takes time and resources at the origin side, then again at the destination side to undo the manufacturing steps. However, sometimes its worth it to a company. There are lots of examples of companies doing exactly this.
Ford Transit Connect cargo vans were made in Turkey. Ford wanted to import them to the USA. However, there was a tariff placed on vehicles for commercial use, so Ford installed cheap passengers seats in the back and imported them as passenger vehicles. As soon as the vehicles would arrive onshore in the USA, Ford would rip the cheap seats out, and sell them as commercial vehicles.
Do you have examples of individual components being swapped to avoid tariffs?
For PC parts, it would be very inexpensive to make a cheap mobo, chassis, and UX. E.g., they could put a high end server CPU or something into one of those small handhelds (like Anbernic devices), and then move it to an actual server in the US. Those chips can run more than $1k, while those Anbernic devices tend to run a couple hundred, so the small overhead would absolutely be worth being taxed at 15% instead of 100%.
Surely regulators have learned from the Ford Transit thing...
I don't, but these new tariffs don't match what we'd had before.
The closest I can think of is one scheme to avoid aluminum import tariffs. A company cut bar stock into longer lengths and did the cheapest/fastest/worst job of spot welding them together into the shape of a finished good (a chair or table, can't remember). The "chairs" were imported, then the receiving company simply broken the simple spot welds and fed the again-bar-stock into manufacturing processes.
It would be cheaper, but not inexpensive. This would require setting up an entire manufacturing assembly line to create and assemble the carrier product, and a reciprocal dis-assembly line on the other side to reclaim the desired CPU part. Its doable, but quite a bit of additional expense when the straight non-bypass method is a robot removing a CPU from a tray and inserting it directly into the finished product. Would it be worth it? Potentially yes! That's why I made my first post here on the topic.
The existing tariffs somehow exclude chips or phones/computers with chips in them. This would be a separate category, like metals.