Presidential candidates Donald Trump and Kamala Harris differ completely over the impact of the US CHIPS Act, but their positions on free trade and tariffs affecting chips and electronics are not as clear cut, making it hard for astute observers to predict how the winner will impact the industry over the next four years.
The two candidates face a razor close election where economic issues are front and center. However, the $611 billion semiconductor industry often gets secondary attention by the two, except regarding more general concerns about US manufacturing prowess and trade with Asia, especially China and Taiwan.
“Trump versus Harris on chips is hard to scope out,” commented Jack Gold, president and principal analyst at J. Gold Associates.
Trump wants tariffs on chips from Taiwan and calls the CHIPS Act “so bad”
Trump has recently attacked the $51 billion US CHIPS Act passed in 2022 during the Biden administration, while Harris continues to praise the measure for generating a more secure domestic pipeline for chips and electronics and acting as a US jobs creator. But what happens to tariffs and bans on chips sales to China like those imposed by the Biden administration make it difficult to parse which candidate will be better for the US electronics industry in the next presidential term and, ultimately, businesses and consumers that buy and depend on such products.
Significantly, Trump told podcaster Joe Rogan recently he would implement tariffs on chips from Taiwan if elected, even though 90% of advanced chips come from TSMC based in Taiwan. Meanwhile TSMC is getting nearly $7 billion from the CHIPS Act for its Arizona foundry. “You know, Taiwan, they stole our chip business…and they want protection,” Trump said during his appearance on the Joe Rogan Experience podcast.
“That chip deal is so bad,” Trump added. “We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here.” Samsung, based in South Korea, is also a CHIPS Act preliminary grant recipient.
Harris lauds CHIPS Act for promoting domestic manufacturing and jobs
By comparison, Harris has not been specific about future tariffs or export sanctions affecting chips and electronics. Most observers expect she will continue most Biden trade policies affecting the electronics industry that include an embargo on sales of the most advanced chips to China like many of Nvidia’s GPUs.
However, she has been laudatory about the CHIPS Act as an inducement for US-based manufacturing and on Monday toured the Hemlock Semiconductor facility in Saginaw County, Mich. The company has received $325 million in a preliminary grant under the CHIPS Act. In addition to flat grants, the Act creates tax credits as an incentive for private sector work, she noted. She also took the chance to blast Trump for selling advanced chips to China when he was president to help China with its “agenda to modernize their military.”
Harris and Trump statements on manufacturing and trade
Even with such acute differences, two analysts said the impact the two candidates will have on future chips policy, including trade restrictions and tariffs, are not clear. Both candidates list some views about manufacturing and trade on their official websites, with Trump focused on "Fair Trade for the American Worker" while Harris focused on “Invest in American Innovation and Industrial Strength Powered by American Workers.” Against that online backdrop, the candidates are interspersing campaign stops with comments on the CHIPS Act, with less talk lately about future policies except for Trump’s willingness to place tariffs on many products including EVs from China and his mention of a Taiwan chips tariff.
RELATED: How EV incentives will fare under Harris or Trump
KPMG compares Trump and Harris on trade
Several economists have evaluated the candidates on their expected trade policies, not only regarding semiconductor trade. KPMG, among others, noted that Harris is expected to adopt Biden trade policies if elected, which include maintaining tariffs imposed during the Trump era. Biden had criticized 301 tariffs introduced by Trump, but has not taken action to repeal them. In 2018, Trump signed a memorandum under Section 301 of the Trade Act of 1974 that instructed the US Trade Representation to apply tariffs on Chinese goods due to Chinese theft of intellectual property.
“A Harris presidency would likely seek to enhance the efficacy of the CHIPS and Science Act via a ‘CHIPS for America’ strategy” outlined by NIST, KPMG said.
KPMG said Trump will likely double down on the aggressive stance towards China trade he took as president, which included decoupling completely from US-China economies and supply chains. “Trump is likely to impose sanctions and additional tariffs aimed at forcing China into more favorable trade terms for the US,” which could include 10-20% additional tariff for all goods imported into the US and up to 60% for goods exported from China, KPMG said. “US importers should expect swift and significant disruption should he be elected.”
Hard to call the election and the future of chips and trade policy
Like the tight election, deciding which candidate is better for the chips industry is “hard to call,” said Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy. “The Trump administration was the first to create the groundwork for the CHIPS Act, then Biden officially got it over the line. Trump is also talking about clamping down on TSMC, but that’s likely a ruse to get TSMC to invest more in the US. Trump will likely drive a CHIPS Act 2. It’s unclear what a Harris administration would do with semiconductors and it hasn’t been discussed.”
Gold added, “Taking the incentives route like the CHIPS Act is far better long term than applying tariffs to everything. Tariffs don’t really help create more US chip manufacturing and they negatively affect consumers and raise our trade imbalance. Putting a tariff on all chips created in Taiwan would mean a tariff on almost everything that people buy that has electronics in it, and that’s almost everything these days.”
IPC is concerned PCB and assembly are overlooked by government
Some members of the electronics industry feel too many of the $39 billion in CHIPS Act grants have favored production of logic chips and the most advanced nodes. The industry group IPC backs more government support of PCB (Printed Computer Board) fabrication and electronics assembly. “The PCB and Electronics Manufacturing Services Industry have been raising these concerns for years, so the pace of government response is frustratingly slow,” said Chris Mitchell, IPC vice president of global government relations.
However, government grants, loans and tax exemptions in the CHIPS Act have generally pleased the semiconductor industry, as the Semiconductor Industry Association consistently points out, noting the more than $30 billion in government proposed grants have boosted private capital chip manufacturing investment many times the size of the proposed grants. Neither SIA nor IPC have endorsed a candidate for president.
SIA has argued that tariffs paid to the government would not help fabs to be built in the US due the average cost of a fab at $20 billion.
"No tariff amount will equal the costs of ripping apart these investments and efficient supply chains that have enabled current US industry leadership," SIA said.
"Moreover, chip tariffs will drive away manufacturing in advanced sectors that rely on semiconductor technology, such as aerospace, AI, robotics, next-generation networks, and autonomous vehicles. If the cost of key inputs like semiconductors is too high, tech manufacturers will relocate out of the US, costing jobs and further eroding US manufacturing and technological competitiveness."
A final thought on chip tariffs
By contrast, expanding tariffs in the next presidential term will raise the cost of end products to consumers and businesses, economists and analysts have warned.
Gold added: “Nearly all chips that are ARM based are made at TSMC, so a tariff on Taiwan means everything from toasters to TVs to phones to PCs and peripherals—even data centers. A lot of chips, especially memory, come from South Korea. Would Trump put a tariff on those as well? If so, that could mean a huge price increase on everything from PCs and their SSD drives to servers to hyperscalers and AI infrastructure.
“With chip production picking up in mainland China, a tariff on all chips means products in the US would be much more expensive than in the rest of the world.”