Semiconductors escape US tariffs, easing concerns for chip industry

Semiconductors were spared Trump's reciprocal tariffs, reflecting their key role in global supply chains, say industry experts

Semiconductors have been excluded from the US President Donald Trump’s latest round of reciprocal tariffs. Industry body India Electronics and Semiconductor Association (IESA) has described this move as recognition of semiconductors’ critical role in global supply chains, according to a report by PTI.

 

The White House, in its fact sheet on new tariffs mentioned, “Some goods will not be subject to the reciprocal tariff. These include copper, pharmaceuticals, semiconductors, and lumber articles; all articles that may become subject to future tariffs."

 

According to media reports, the Global Trade Research Initiative (GTRI) considers Trump’s protectionist tariff regime as a catalyst for India to gain from global supply chain realignments. “The semiconductor space, while still dominated by technologically advanced players like Taiwan, also offers potential for India to capture parts of the value chain such as packaging, testing, and lower-end chip manufacturing,” said GTRI Founder Ajay Srivastava in a statement. 

 

 

The industry analysts say with higher US tariffs on countries like Vietnam, some supply chains may shift toward India, boosting the country’s exports in the space of electronics and electricals.

 

However, the industry experts have warned that the broader tariff measures pose a significant threat to India's exports, given that the US is one of India’s largest trading partners, and thus, it must act swiftly to protect competitiveness as the fear of a global trade war escalates. To preserve its competitive position, India must urgently recalibrate its strategy by leveraging trade diplomacy, making domestic policy adjustments, and reinforcing industrial resilience, said the report industry bodies. 

 

But, for now, the chip industry, which is the backbone of modern technology, powering everything from smartphones and computers to healthcare devices and communication networks, has been spared from the latest levies and can breathe a sigh of relief.

 

On Thursday early morning (Indian Standard Time), Trump unveiled sweeping tariff increases under a new trade regime aimed at redefining the US's global economic position. He referred to the day as ‘Liberation Day’, declaring the start of what he envisions as a ‘golden age’ for American jobs and manufacturing. As part of the move, Indian goods now face a 27 per cent tariff when entering the US.