Tech Sector Policy Risks and Opportunities Under Trump's New Trade Stance

The Trump administration’s aggressive 2025 trade policies—centered on 100% tariffs on imported semiconductors and a parallel push to export U.S.-developed AI technologies—are reshaping global supply chains and investor strategies. These moves, framed as a defense of national security and industrial independence, have created a bifurcated landscape where large corporations with U.S. manufacturing commitments gain significant advantages, while smaller firms and global suppliers face heightened risks.

Tariffs, Exemptions, and the Semiconductor Dilemma

At the heart of the policy is a 100% tariff on imported semiconductors, a measure designed to force companies to either reshore production or absorb steep costs. However, the administration has carved out exemptions for firms that commit to U.S. manufacturing, including Apple, TSMC, and Samsung. For example, Apple’s $100 billion pledge to U.S. production and TSMC’s $165 billion Arizona expansion have secured them tariff-free status, incentivizing further domestic investment [1]. This creates a two-tier system: large firms with capital and political clout can navigate the tariffs, while smaller chipmakers—particularly those in Southeast Asia—struggle to compete [4].

The policy’s complexity extends to raw materials and equipment. While finished chips face tariffs, manufacturing equipment (e.g., lithography machines) and certain raw materials have been exempted through trade deals with South Korea, Malaysia, and the EU [6]. This exemption preserves the economics of factory expansions but shifts cost burdens to finished products and materials like copper, where buyers now face price volatility [3]. The result is a fragmented cost structure: equipment remains stable, but chip pricing and material costs are under pressure.

AI Diplomacy and the Global Tech Race

Parallel to the tariffs, the White House has launched an aggressive AI export strategy via Executive Order 14320, which establishes the American AI Exports Program. This initiative aims to bundle U.S.-developed AI technologies—ranging from hardware to data pipelines—into export packages, backed by federal financing tools like direct loans and equity investments [1]. The goal is to align global AI supply chains with U.S. standards and reduce reliance on rival nations.

This strategy is part of a broader "AI Action Plan" emphasizing infrastructure, innovation, and diplomatic outreach. For instance, the U.S. is leveraging multilateral agreements to promote its AI governance framework, while restricting the export of advanced technologies to adversaries [2]. These efforts position the U.S. to dominate the next phase of the AI arms race but risk fragmenting global tech ecosystems into competing blocs.

Investor Reactions and Market Realignment

Investor positioning has shifted in response to the policy uncertainty. J.P. Morgan notes that the average effective U.S. tariff rate has risen to 18.6%, the highest since 1933, with the semiconductor sector facing a two-track cost structure [3]. Large firms like Nvidia and Intel, which have secured government-backed exemptions or equity stakes (e.g., the Trump administration’s 9.9% ownership of Intel), are better positioned to weather the storm [5]. Conversely, smaller firms and those reliant on China—such as those in the automotive and industrial sectors—face acute shortages of mature-node components like microcontrollers [4].

The legal landscape adds further volatility. A May 2025 court ruling declared many IEEPA-based tariffs illegal, though enforcement continues pending appeals [2]. This uncertainty has led to strategic hedging: companies are diversifying supply chains into Southeast Asia and accelerating R&D to offset reshoring costs [4].

Risks and Opportunities for Investors

For investors, the policy environment presents both risks and opportunities. Winners include U.S. chipmakers with domestic production capacity (e.g., TSMC, Intel) and AI firms aligned with federal export goals (e.g., Nvidia). These firms benefit from tariff exemptions, government financing, and a growing domestic market. Conversely, losers include smaller chipmakers, global suppliers, and sectors reliant on mature-node components, which face rising costs and supply chain fragility [4].

The AI export strategy also opens opportunities for firms involved in data infrastructure, cybersecurity, and AI governance software. However, the long-term success of these initiatives depends on the U.S. ability to maintain technological leadership and navigate geopolitical tensions.

Conclusion

Trump’s trade policies are a double-edged sword: they aim to fortify U.S. tech dominance but risk fragmenting global supply chains and inflating costs. For investors, the key lies in identifying firms that can leverage exemptions and government support while hedging against the broader uncertainties of a protectionist era. As the administration’s legal battles unfold and trade deals evolve, the tech sector’s resilience will hinge on its ability to adapt to a rapidly shifting geopolitical and economic landscape.

Source:
[1] Promoting The Export of the American AI Technology Stack,
https://www.whitehouse.gov/presidential-actions/2025/07/promoting-the-export-of-the-american-ai-technology-stack/
[2] Trump says US to levy 100% tariff on imported chips, some firms exempt,
https://www.reuters.com/world/china/trump-says-us-levy-100-tariff-imported-chips-some-firms-exempt-2025-08-07/
[3] US Tariffs: What's the Impact? | J.P. Morgan Global Research,
https://www.jpmorgan.com/insights/global-research/current-events/us-tariffs
[4] Semiconductors Drive the Digital Economy: How Will Tariffs Affect the Ride for Chip Makers and Suppliers?,
https://tbmcg.com/resources/blog/how-will-tariffs-affect-the-ride-for-semiconductor-manufacturers-and-suppliers/
[5] Intel and Trump Administration Reach Historic Agreement,
https://newsroom.intel.com/corporate/intel-and-trump-administration-reach-historic-agreement
[6] Semi equipment exempt from tariffs in EU-US trade deal,
https://bits-chips.com/article/semi-equipment-exempt-from-tariffs-in-eu-us-trade-deal/