Trump's semiconductor strategy creates unprecedented compliance challenges for legal teams navigating tariff threats, supply chain disruption, and tightening export controls.
Key takeaways
- Trump's 100% tariff threat forces companies to choose: manufacture in the US or risk losing market access entirely.
- Section 232 investigations into polysilicon and semiconductors could result in sudden restrictions on imports.
- Origin tracking and export control compliance are now critical as enforcement intensifies across supply chains.
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Semiconductors have become ground zero for US trade policy, underpinning critical industries from consumer electronics to aerospace and national security technologies.
The Trump administration's approach to the semiconductor sector operates through a dual strategy: actively supporting and incentivising domestic chip production while simultaneously using tariffs to restrict foreign semiconductors from entering the US market.
On 6 August 2025, Trump threatened 100% tariffs on all imported semiconductors. The message to companies was stark: manufacture in the US or risk losing the market entirely.
Even without the threatened 100% rate, a patchwork of tariffs applies to semiconductors imported into the US from around the world. The EU will benefit from a 15% general tariff rate covering semiconductors as and when its trade agreement with the US is finalised, while individual companies like Samsung and SK Hynix have secured exemptions through US manufacturing commitments. However, uncertainty pervades actual implementation, leaving compliance teams to plan for multiple scenarios simultaneously.
How has US trade policy reshaped semiconductor supply chains?
The ripple effects are already transforming global semiconductor manufacturing patterns. Semiconductor companies have shown support for Trump's reshoring goals, recognising the penalties for importing their wares from outside the US.
The Semiconductor Industry Association (SIA) said in a statement on 7 August 2025, in response to the 100% tariff threat, that US policy interventions must be “designed to maintain and grow” American leadership position. According to the SIA, US semiconductor industry is the global leader in semiconductor sales, holding a 51% market share.
Domestic production support has intensified dramatically. The US$11.1 billion government investment in Intel in August sent an unmistakable signal about the Trump administration’s priorities. In a statement, an Intel spokesperson said that it “reflect[s] the confidence the Administration has in Intel to advance key national priorities and the critically important role the company plays in expanding the domestic semiconductor industry.”
Beyond the Intel investment, the Trump administration has focused on attracting investment into semiconductor manufacturing capacity in the US. Earlier this year, the US Department of Commerce announced that Micron Technology will invest US$200 billion in semiconductor manufacturing and R&D. This creates both opportunities and compliance obligations for companies positioning themselves within this strategic framework.
Non-US manufacturers face mounting pressure to devise strategies to maintain production volume and margins. Production delays could plague US companies that rely on Chinese chips, creating bottlenecks that force supplier diversification. US manufacturers are compelled to increase domestic R&D investment, reducing dependency on foreign technologies while making substantial US investment pledges. Taiwan Semiconductor Manufacturing Company's US$100 billion commitment in March to expand US manufacturing capacity exemplifies this trend.
What legal and compliance challenges does US trade policy pose to semiconductor manufacturers?
Rules and questions of origin tracking
Knowing exactly where chips originate has become paramount for semiconductor manufacturers and their downstream customers.
Legal teams must implement robust origin tracking systems capable of withstanding increased scrutiny and a crackdown on “origin washing” cases.
Transshipped goods – products routed through third countries to exploit lower tariffs or obscure origin – now can carry a 40% tariff rate. Supplier verification and documentation accuracy are now critical compliance priorities as the era of exploiting transshipment loopholes ends.
The risks of inadequate documentation are severe: fines, shipment delays, and potential market access loss.
Export controls
Export controls to high-risk jurisdictions continue expanding as the administration recognises semiconductors as foundational to national security and technological supremacy. Because semiconductors power everything from military defence systems to AI capabilities, the US is increasingly restricting exports of its own advanced chips and semiconductor technology to prevent its adversaries from accessing critical components that could strengthen their technological or military capabilities.
The Trump administration's willingness to make dramatic policy shifts became evident when it previously requested that companies halt exports of semiconductor technology to China, although it later rescinded the request. These actions illustrate readiness for drastic measures reflecting semiconductors' strategic importance to national security.
The recent enforcement action against Cadence exemplifies the risks of non-compliance with export controls. Legal teams should ensure robust systems capture current requirements while adapting rapidly to sudden policy changes.
The Trump administration's commitment to tightening export controls became further evident on 29 August 2025 when the US Commerce Department’s Bureau of Industry and Security closed a significant loophole in the validated end-user programme. This programme had allowed select non-US companies to export US-origin goods, software, and technology licence-free to manufacture semiconductors in China. The closure of this programme represents another layer of complexity for companies with manufacturing operations or partnerships in China, requiring immediate compliance framework adjustments.
Balancing WTO and US compliance
Navigating between US requirements and World Trade Organization (WTO) obligations creates ongoing tension for legal teams, who must build compliance frameworks satisfying US demands while minimising exposure to international trade disputes.
What emerging risks should semiconductor manufacturers be preparing for?
Section 232 investigation outcomes
On 1 April 2025, the BIS opened a Section 232 investigation under the Trade Expansion Act 1962 into semiconductors and related manufacturing equipment. The result of the investigation could carry enormous implications, with findings due by 27 December 2025.
Industry feedback on the investigation reveals concern from market players about potential blanket tariffs undermining US AI competitiveness.
The SIA urges the administration to “consult closely with SIA and its member companies to understand and consider the effects of potential actions on the global semiconductor market.” The Information Technology & Innovation Foundation advocates focusing “foremost on addressing China's mercantilist policies” rather than imposing blanket tariffs.
A related Section 232 investigation of polysilicon, concluding by 28 March 2026, adds another dimension given polysilicon's role in semiconductor production. Companies face potential sudden cost increases and legal exposure if sourcing isn't adequately diversified.
Policy experts warn that blanket tariffs could undermine competitiveness and harm sectors that depend on semiconductor components. Companies must prepare for sudden restrictions, quotas, or other measures if threats are identified.
Expect more changes to come
The evolving trade deal landscape promises additional exemptions as countries negotiate reciprocal tariff reductions. Whilst South Korea's efforts failed, other nations continue pursuing agreements. Legal teams must monitor emerging trade deals for semiconductor-specific provisions altering compliance requirements.
Detailed documentation from announced agreements may, like the US-EU deal, specify new rates for semiconductors, creating ongoing compliance adaptation requirements.
After the US Court of Appeals for the Federal Circuit ruled that the “reciprocal” tariffs and the tariffs related to fentanyl trafficking are illegal, Trump’s entire tariff strategy has been thrown into question.
Given these recent changes, legal and compliance teams should continue to monitor for tariff changes and updates.