While Trump tariffs spare phones/PCs, R&D could faces GPU cost pressures

President Trump’s recent tariff actions exempted key consumer electronics like smartphones and computers, and thus have shielded average consumers. Yet R&D groups that are planning on investing in GPUs for local inference face a potential cost shock, as graphics card imports are now subject to steep duties—reaching up to 145% if assembled in China.

While cards assembled in Taiwan face a lower, currently paused 10% rate, the overall policy whiplash prompted suppliers to halt shipments immediately following the announcements. For context, most GPUs are assembled in East and Southeast Asia, most frequently in China, Taiwan, Malaysia, and South Korea.

It’s not just assembled graphics cards feeling the pinch. The core semiconductor chips face their own set of tariff troubles. While they dodged the newest reciprocal duties, chips and related parts coming from China still carry earlier Section 301 tariffs – and those rates could climb. On top of that, threats loom of entirely new tariffs aimed squarely at semiconductors, possibly even hitting key partners like Taiwan. All this uncertainty creates headaches for R&D teams heavily reliant on these chips, making everything from component sourcing to long-term tech planning a major challenge.

Tech companies have been collectively pouring hundreds of billions of dollars annually into semiconductors. The tariffs could dampen that growth. According to Reuters quoting Abhishek Singh, partner at research firm Everest Group: “Capital expenditure by tech giants will get reshuffled: Expect major players in AI infrastructure and consumer tech to reallocate short-term spending away from expansion and toward procurement hedging or sourcing shifts.”

The early 2025 tariff storm

Early 2025 brought a dramatic escalation in tariffs. Long-standing Section 301 duties on Chinese goods (like the 25% on many chips since 2018, potentially rising to 50%) were just one piece. Added to the mix were Section 232 national security tariffs on metals and autos, and several moves under the International Emergency Economic Powers Act (IEEPA).

IEEPA drove new tariffs over fentanyl/migration (hitting 20% for China, 25% for non-USMCA North America). It also powered the highly disruptive “reciprocal tariffs” unveiled April 2. These intended to match global duties, starting at 10% (excluding Canada/Mexico) with higher rates planned. Then came the whiplash. On April 9, the planned hikes were paused for 90 days for most nations during negotiations. At the same time, though, China’s reciprocal rate jumped to 125%. Together with the 20% fentanyl tariff, this meant a steep 145% combined rate on many Chinese goods by mid-April.

Absorbing that will be tough for many companies, according to CNBC. Barclays retail analyst Seth Sigman predicts consumers will pay: “Unfortunately, some of it will result in higher prices.”

The Mexico loophole

The extreme tariffs, especially the 145% rate on Chinese assemblies, immediately ratcheted up the search for alternative manufacturing locations and logistical workarounds. Mexico quickly gained prominence as a favored nearshoring destination, especially for electronics like AI servers and potentially GPU assemblies. Companies like Nvidia were reportedly exploring or already tapping Mexican facilities to assemble systems, aiming to draw on the United States-Mexico-Canada Agreement (USMCA) to potentially avoid the steep U.S. tariffs applied to finished goods from China.

According to a CNBC report, while tariffs may drive reshoring, the process isn’t straightforward. Morgan Stanley analyst Chris Snyder sees tariffs as a “positive catalyst” for reshoring but doesn’t expect a massive wave of projects returning to the U.S. in the near term, predicting primarily “small, quick turnaround investments that could boost output by about 2%.”

GPUs caught in the tariff crossfire

Pinpointing the tariff status for GPUs sparked immediate confusion and worry. Early theories floated exemptions – maybe under semiconductor codes (HTS 8542) or possibly swept up in Section 232 aluminum tariffs. But industry clarifications soon shot those down. Assembled GPUs typically fall under HTS 8473 or 8471, codes that offered no shelter from the IEEPA reciprocal tariffs.

According to Reuters, the classification details are crucial. “The key is how the AI hardware is classified,” explains Dylan Patel, founder of industry research firm SemiAnalysis. “The Trump administration could exempt semiconductors but not the circuit board assemblies they are sold with.”

Although Section 232 tariffs on aluminum were in play, the IEEPA framework almost certainly dictated the tariff fate of assembled GPUs. Unlike finished consumer goods or bare chips, GPUs received no exemption – suggesting a deliberate focus, possibly linked to their critical AI function. This put enormous pressure on the supply chain. Companies started scrambling for alternatives, such as importing tariff-exempt chips (8542) separately for assembly in the U.S. or Mexico, even with the added logistical hurdles.

Design in the U.S., fab in Taiwan

The trade conflict also highlighted how technical customs rules can become geopolitical flashpoints, particularly concerning semiconductor origins. In a significant counter-move, China clarified that its retaliatory tariffs (matching the U.S. 125% rate on many goods) would treat the country of origin for semiconductors based on where the wafer is fabricated, not where the chip is designed or packaged. This seemingly technical distinction created a strategic realignment: chips designed by U.S. fabless giants like Nvidia, AMD, and Apple, but manufactured by partners like TSMC in Taiwan, were classified as Taiwanese origin and thus exempt from China’s crippling 125% retaliatory duty on U.S. goods. Conversely, chips designed and fabricated in the U.S. by integrated device manufacturers (IDMs) like Intel would face the full 125% tariff if exported to China. This policy effectively incentivized U.S. firms serving the large Chinese market to prioritize Taiwanese fabs over potential U.S. domestic production for those specific exports, raising questions about whether tariff dynamics could inadvertently devalue investments in U.S.-based fab capacity (like Intel’s or CHIPS Act-supported facilities) for key export markets.

Semiconductors: A multi-layered tariff reality

The tariff picture for bare semiconductor chips (HTS 8541/8542) had several layers. While chips got an explicit pass from the new IEEPA reciprocal tariffs (thanks to Annex II), they weren’t off the hook entirely. Chips coming from China still faced the old 25% Section 301 tariffs dating back to 2018. Adding to the pressure, the USTR had already flagged plans to hike that rate to 50% starting January 1, 2025. And there was another potential wrinkly: separate proposals floated entirely new tariffs aimed just at semiconductors. These could potentially hit imports even from key partners like Taiwan (with rates discussed from 25% to 100%) and target inputs like Chinese polysilicon and wafers. It all pointed to a two-pronged U.S. strategy: shield the broader economy from immediate disruption via the reciprocal tariff exemptions, but keep squeezing China specifically through Section 301 while exploring new ways to reshape the global chip supply chain. For instance, according to Tom’s Hardware, if a 25% tariff is applied on high-value AI GPUs, “such a tariff will either hurt Nvidia’s margins or make its GPUs more expensive for buyers in America.”

The July 9 Cliff: What happens when the tariff pause expires?

While China tariffs grabbed the headlines, a different kind of uncertainty is brewing elsewhere. A deadline looms for imports from roughly 75 other countries: July 9, 2025. That’s when the 90-day pause on higher reciprocal tariff rates, announced back on April 9, runs out. If negotiators don’t strike a deal or grant an extension by then, those suspended higher rates – like the initial 32% for Taiwan or 46% for Vietnam – could snap back into place, replacing the current 10% baseline. This deadline injects fresh uncertainty for importers sourcing from these regions.