Trump Threatens 300% Semiconductor Tariff, Rattling AI Market & Reviving Memories of His Previous Steel and Aluminum Battles

U.S. President Donald Trump has once again thrown global markets into uncertainty with his latest tariff warning, this time singling out semiconductors for duties of up to 300%.

The threat, made aboard Air Force One and reported by Bloomberg, comes as the President prepares a package of new trade actions covering steel, chips, and possibly pharmaceuticals.

“I am going to have a rate that is going to be 200%, 300%,” Trump said, adding fresh pressure to an industry already struggling with supply constraints.

For gamers and tech buyers, the headline translates to an alarming scenario: Nvidia’s $1,999 GeForce RTX 5090 graphics card could cost close to $6,000 if the duties are enacted. For industry leaders, however, the move recalls Trump’s earlier tariff fights — with equally high stakes for supply chains, jobs, and prices.

Lessons from Steel and Aluminum

Although the legality has come under question, Trump is no stranger to using Section 232 of U.S. trade law to impose tariffs under the banner of national security. In 2018, he stunned global markets by slapping a 25% tariff on steel and 10% on aluminum imports. The justification was framed around protecting America’s industrial base, but the impact was immediate and polarizing.

Steelmakers in the U.S. cheered the decision, with companies like U.S. Steel and Century Aluminum briefly reporting job growth and reopening some facilities. But downstream industries — automakers, construction firms, and machinery manufacturers — faced soaring input costs. In some cases, U.S. companies ended up paying higher prices for domestically produced steel than their foreign rivals paid abroad, eroding competitiveness.

Internationally, Trump’s Section 232 tariffs ignited trade tensions, prompting retaliation from allies like the European Union, Canada, and Mexico. Many of those retaliatory tariffs were strategically targeted, hitting American exports of bourbon, motorcycles, and agricultural goods.

Now, Trump appears ready to apply the same playbook to semiconductors, a sector far more globally integrated than steel or aluminum. Unlike metals, which can be mined and refined domestically, chip production relies on a web of international suppliers — from Taiwanese foundries like TSMC, to South Korean memory producers, to Dutch lithography specialists.

Slapping 200%–300% tariffs on semiconductors would almost certainly disrupt this delicate balance. Unlike the steel industry, where some U.S. producers gained in the short term, the U.S. has limited capacity to suddenly replace Asia’s dominance in advanced chip manufacturing. Even Intel, the country’s largest semiconductor firm, still relies heavily on overseas production for its most cutting-edge technology.

The risk, analysts warn, is that tariffs could drive up costs across the board while failing to meaningfully strengthen U.S. production capacity in the near term. That scenario would leave American AI firms, consumer electronics companies, and defense contractors squeezed between soaring costs and limited supply.

The semiconductor threat has already triggered comparisons to the whiplash of 2018. Back then, industries spent months lobbying the Trump administration for exemptions, some of which were granted piecemeal, creating confusion. Today, companies in tech and AI are bracing for a similar lobbying battle, while also preparing backup supply strategies.

For AI startups, already competing for scarce Nvidia and AMD chips, the possibility of a 300% duty adds a daunting financial hurdle. Large players like Microsoft, Google, and Amazon — whose cloud platforms depend on massive chip orders — may absorb some costs, but smaller firms could find themselves priced out of the market.

Pharmaceutical firms, another potential target in Trump’s upcoming tariff package, face a different kind of risk. The U.S. relies heavily on imports of active pharmaceutical ingredients (APIs) from India and China. A sweeping tariff regime could ripple through drug pricing, hitting consumers directly.

From Tariff Shock to Uncertainty Tax

What ties the steel fight of 2018 to the chip battle of 2025 is Trump’s negotiating style: the use of extreme tariff threats as both leverage and political messaging. Back then, steel tariffs triggered an international backlash but also energized Trump’s base in industrial states. Now, semiconductor tariffs carry the same dual potential — appealing to a base that wants to see U.S. self-sufficiency, while at the same time alarming global markets.

However, the stakes are higher this time. Semiconductors are not just a raw material; they are the foundation of modern economies, powering AI, defense, healthcare, and communications. A tariff shock here could ricochet across industries in ways steel never did.

It is believed that with steel, tariffs raised costs, but the supply was at least domestic. With chips, tariffs risk breaking the supply chain entirely.