Warnings continue that the tariff on semiconductor imports promoted by the Trump administration could not only fail to protect domestic industries but might also deliver a critical blow to technological competitiveness and economic growth. The Semiconductor Industry Association (SIA), representing the U.S. semiconductor industry, and the Information Technology and Innovation Foundation (ITIF), a leading tech policy think tank in Washington, both noted that tariffs on semiconductor imports could paradoxically dampen investment and ultimately shake America's technological leadership.
The SIA and ITIF each submitted a 20-page opinion to the Bureau of Industry and Security of the U.S. Department of Commerce on the injustices of imposing tariffs on semiconductors on the 7th. This follows the Commerce Department's request for public comments from the industry and experts while conducting a national security investigation into semiconductor and equipment imports. It has been reported that these institutions, along with major domestic and foreign semiconductor and IT corporations such as SK hynix and Samsung Electronics, also conveyed their concerns to the U.S. government.
◇ “A 1% tariff means manufacturing costs will rise by 0.34%... U.S. production incentives will disappear”
The opinion submitted by the SIA and ITIF asserts that imposing tariffs on semiconductors will thwart Trump's proclaimed 'revival of American manufacturing'. The SIA estimated that even a 1% increase in tariffs would raise the average construction cost of semiconductor fabs (manufacturing plants) by 0.34%. Given that manufacturing costs in the U.S. are already 30-50% higher compared to Asia, the imposition of tariffs on imported equipment and materials would imply a weakening of production incentives for semiconductors in the U.S.
The ITIF also pointed out that high tariffs on extreme ultraviolet (EUV) lithography equipment, vital for cutting-edge semiconductor production, could undermine U.S. manufacturing competitiveness. A single EUV device contains more than 450,000 components, most of which rely on foreign supply. If tariffs are imposed on these components, costs could skyrocket, leading to results contrary to the U.S. government's goal of achieving semiconductor self-sufficiency. The ITIF stated, “Once the specialized global supply chain collapses, the U.S. fab strategy will be left with nothing but a shell.”
Concerns were also raised that semiconductor tariffs would not only increase chip production costs but threaten the competitiveness of the entire strategic industry. A single automobile contains between 1,000 and 3,000 semiconductors, and artificial intelligence data centers use over 340,000 chips, making semiconductors the foundation of major industries. ITIF pointed out that if semiconductor prices rise due to tariffs, the prices of cars, servers, and medical devices will also increase in succession, which will burden U.S. manufacturing as a whole. The SIA analyzed that if chip prices rise by $1 due to tariffs, the final product price must increase by more than $3 to maintain existing profit margins. Thus, there are concerns that industries crucial to AI, defense, healthcare, and others may lose their technological edge due to high costs and disruptions in component procurement.
◇ “U.S. corporations may face the worst possibility of being trapped in the domestic market”
They also pointed out that export impacts are inevitable. Approximately 70% of revenue for U.S. semiconductor companies comes from overseas, and if tariffs are imposed, other countries are likely to retaliate with counter-tariffs. The ITIF warned that if so-called 'mirror tariffs' are introduced, U.S. information and communication technology (ICT) exports could suffer an annual loss of $56 billion (about 79 trillion won) and that there is a worst-case scenario where U.S. corporations could be trapped in the domestic market and become a 'Galapagos industry.'
The SIA and ITIF declared that this tariff-centered approach is outdated. They argue that policies such as extending tax credits from the CHIPS Act, streamlining permitting processes, and training technical personnel would be more effective alternatives for achieving Trump's goal of 'expanding American manufacturing.' The ITIF emphasized, “If tariffs are introduced under the guise of expanding semiconductor manufacturing in the U.S., it could ultimately undermine that very goal,” warning that tariffs would exacerbate costs and confusion and could paralyze American technological innovation in the long run.
As criticism from experts and the industry continues, there are projections that Trump’s semiconductor tariffs could be implemented as early as the end of June. The industry believes that Trump is likely to adopt a 'carrot and stick' approach regarding semiconductor tariffs. It is expected that semiconductors based on mature processes will likely be the first target for tariff imposition, while tariffs on cutting-edge chips will be gradually implemented after domestic production capacity is secured through tariff allocation.