^{Wealth & Poverty Review} Beware, Broad Semiconductor Tariffs Would Make Everything More Expensive

The Trump administration has consistently implemented (and recently lowered) Section 232 tariffs on industries critical to America’s economic and national security, including aluminum and steel. But as it considers similar action on semiconductors, we face a fundamentally different challenge.

Semiconductors are not like other inputs; they can be found inside nearly everything Americans buy. They are a vital component of modern life, and a secure semiconductor supply chain is essential to protecting everyday consumers and the economy writ large.

The impacts of broad semiconductor tariffs would be felt immediately at home. Legacy chips power everyday life, from planes to machinery to the GPS in our cars. They’re found in the tablets and calculators that students and their parents are buying for back-to-school, and in the medical devices that save patients’ lives. Hastily applied tariffs from the current Section 232 investigation would not just impact one industry; they would ripple through family budgets and American businesses, raising prices and undermining the very competitiveness they are meant to protect.

Affordability remains one of Americans’ most pressing concerns. While inflation has cooled in comparison to the Biden-Harris administration, consumer prices overall have still risen 3.5 percent over the past year. Disrupting critical semiconductor supply chains through overly broad tariffs would pressure manufacturers with increased costs that are not just confined to corporate balance sheets. They would ultimately show up in the prices families pay for electronics, appliances, and other everyday necessities. In fact, research from the Information Technology & Innovation Foundation estimates that a 25 percent semiconductor tariff could lead to a 26 percent decline in information and communications technology (ICT) spending and contribute to a longer-term U.S. GDP loss of $1.6 trillion.

Reshoring semiconductor manufacturing with tariffs is a promising long-term goal, but it does not happen overnight. There must be domestic capacity to support an alternative source of supply for them to be successful. Building the infrastructure for such a goal takes years and billions of dollars. Until the U.S. is fully equipped to sustain such manufacturing, importing semiconductors from our allies is critical.

Semiconductors are especially crucial to America’s AI leadership by supporting data centers, keeping us competitive and ahead of our adversaries in China. American businesses — especially technology companies — are already locked in a global race with countries such as China, on both cost and innovation. If tariffs are not designed carefully (or eliminated altogether), American companies will face squeezed margins, slow hiring, and lose out on the very investments tariff policy is meant to secure.

As the administration works to address affordability and strengthen America’s industrial base, it should carefully consider the broad consequences of getting these tariffs wrong. The right policy can support domestic manufacturing, protect military readiness, and preserve America’s technological edge. The wrong policy could raise prices, disrupt production, and hand an advantage to our competitors. America needs a semiconductor policy that reflects its strength and global power, grounded in the realities of today’s supply chains.