Trump spares Big Tech from tariff hike

Key topicsTrump exempts phones, laptops, chips from new China/global tariffsApple, Nvidia, and AI chip firms gain big but relief may be short-livedExemptions spare $390B in imports; new sectoral tariffs may follow.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Debby Wu, Josh Wingrove and Shawn Donnan.President Donald Trump’s administration exempted smartphones, computers and other electronics from its so-called reciprocal tariffs, representing a major reprieve for global technology manufacturers including Apple Inc. and Nvidia Corp. even if it proves a temporary one.The exclusions, published late Friday by US Customs and Border Protection, narrow the scope of the levies by excluding the products from Trump’s 125% China tariff and his baseline 10% global tariff on nearly all other countries.The exclusions apply to smartphones, laptop computers, hard drives and computer processors and memory chips as well as flat-screen displays. Those popular consumer electronics items generally aren’t made in the US. The pause will be welcome news to consumers, some of whom rushed to buy new iPhones and other devices amid fears that the tariffs would send prices soaring. It’s also a big win for major technology companies that have presented massive US spending pledges for Trump in recent months. Trump’s tariffs upended global markets, triggered a selloff in stocks and ignited a rapidly escalating trade war with China.The move is the first significant softening of any kind in Trump’s conflict with China. It was backdated to April 5..The exemptions cover almost $390 billion in US imports based on official US 2024 trade statistics, including more than $101 billion from China, according to data compiled by Gerard DiPippo, associate director of the Rand China Research Center.The biggest category related to China is smartphones. The US imported smartphones valued at more than $41 billion from China in 2024, or about 9% of total imports from China. Also covered are computers and similar devices, of which the US imported more than $36 billion in 2024.Altogether the exemptions cover consumer electronics and semiconductors that accounted for about 22% of US imports from China in 2024, DiPippo said..“This is a large hole in the US tariff wall that will spare key firms like Apple and consumers of laptops and phones from sticker shock,” he said. “But many other consumer, intermediate, and capital goods from China still face prohibitively high US tariffs. This exemption only covers one segment of the US economy.” Trump on Saturday declined to elaborate on the exemptions but hinted at further developments on Monday.“I’ll give you that answer on Monday. We’ll be very specific on Monday,” he told reporters on Air Force One. “We’re taking in a lot of money; as a country we’re taking in a lot of money.”The White House also released a corresponding memo indicating that the exemptions also extend to changes in small-parcel shipping duties. Trump had moved to end the so-called “de minimis” exemption, beginning with China, that generally means parcels worth $800 or below don’t face duties.“President Trump has made it clear America cannot rely on China to manufacturing critical technologies such as semiconductors, chips, smartphones, and laptops,” White House Press Secretary Karoline Leavitt said in a statement. “That’s why the president has secured trillions of dollars in US investments from the largest tech companies in the world.” She said those companies are “hustling to onshore” their manufacturing to the US. The tariff reprieve may prove fleeting. The exclusions stem from the initial order, which prevented extra tariffs on certain sectors from stacking cumulatively on top of the country-wide rates. The exclusion is a sign that the products may soon be subject to a different tariff, albeit almost surely a lower one for China.The products that won’t be subject to Trump’s new tariffs include machines used to make semiconductors. That would be important for Taiwan Semiconductor Manufacturing Co., which has announced a major new investment in the US, as well as other chipmakers.“All products that are properly classified in these listed provisions will be excluded from the reciprocal tariffs,” the notice said.The move appeared to exclude the products from the 10% global baseline tariff on other countries, including Samsung Electronics Co.’s home of South Korea. The tariff reprieve does not extend to a separate Trump levy on China — a 20% duty applied to pressure Beijing to crack down on fentanyl, including the shipment of precursor materials. Other previously existing levies, including those that predate Trump’s current term, also appear unaffected.“The US tech industry has a loud voice and despite initial strong pushback against exemptions within the White House the reality of the situation was finally recognized in the Beltway,” Wedbush Securities analyst Daniel Ives said in a research note on Saturday. “There is still clear uncertainty and volatility ahead with these China negotiations.”The original list of tariff exemptions included some semiconductor products — including central processing units known as CPUs. But those measures did not carve out tech products crucial to AI development including graphics processing units, or GPUs, and the servers that they power. Servers powered by AI chips from companies such as Nvidia and their critical components are primarily manufactured and assembled in Taiwan and Mexico.Friday’s announcement would cover both Taiwanese and Mexican production, in a significant reprieve for companies seeking to build AI infrastructure in the US. Semiconductor Equipment ExemptionsAlso crucial are new exemptions on semiconductor manufacturing equipment, made by companies such as ASML Holding NV in the Netherlands and Tokyo Electron Ltd. in Japan. Those tools are essential for building chip factories, and comprise the lion’s share of the multibillion dollar price tag for such plants. Companies including TSMC, Samsung, and Intel Corp. are building new US facilities with support from the 2022 Chips and Science Act.Trump’s initial “reciprocal” tariff announcement included exemptions for semiconductors and other sectors, to which Trump has regularly pledged to apply a specific tariff. He hasn’t yet done so but the latest exclusions are related to that exemption..The move excludes most of Apple’s core products from the escalating tariffs on China, including iPhones, iPads and Apple watches. Apple shares have slid since Trump announced the tariffs. Discussions gained additional urgency in recent days after Trump increased the tariffs on China, putting companies like Apple in a more difficult position than competitors like Samsung, who are less reliant on China. Companies and tech industry lobbyists have also argued that reshoring the final assembly of smartphones and other products is impossible, one person familiar with the discussions said.But the move also is aimed at laying the groundwork for new targeted sectoral tariffs that are likely to hit the industry.The administration is expected to soon launch a new investigation into imports of semiconductors. That would eventually lead to the imposition of tariffs on chips within weeks or months. Those duties, like ones imposed recently on steel and aluminum, are likely to impose duties on products that include semiconductors as well as the chips themselves.Trump’s sectoral tariffs have so far been set at 25%, though it’s not clear what his rate on semiconductors and related products would be. It’s also not clear how widely he would apply that tariff.Representatives from Nvidia and ASML declined to comment. Spokesmen for Tokyo Electron didn’t immediately respond to a request for comment. The US International Trade Commission declined to comment on the exemptions, while the US Trade Representative and the Department of Commerce didn’t respond to requests for comment. .Read also:The Economist: Trump’s tariffs, Xi’s opportunityFT: Peter Navarro – Why Trump’s tariff plan will fix the broken system of international tradeNvidia gives ‘underwhelming’ report after two years of blowouts.© 2025 Bloomberg L.P.

Trump spares Big Tech from tariff hike

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