The 25% Tariff on AI Chip Sales Is a 'Phase One' Step, Is There More to Come?

Tip Ranks
2026.01.16 08:36
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The U.S. Commerce Department has announced a 25% national security tariff on certain advanced chip sales to China, marking the first phase of actions to protect the semiconductor sector. This move follows the approval of Nvidia's H200 AI chip sale to China, albeit with a 25% cut. President Trump hinted at potential further tariffs, raising concerns among U.S. lawmakers about the implications for the AI chip market and national security. Despite these challenges, Wall Street maintains a Strong Buy consensus on major chip stocks like Nvidia and AMD.

The U.S. Commerce Department's 25% national security tariff on the sale of certain advanced chips to China and other countries announced on Wednesday is just the "phase one" action to protect the country's semiconductor sector, reported Reuters, citing a White House official. Reportedly, this 25% tariff could be followed by further actions, pending talks with other countries and companies. The news of the 25% tariffs came as the Trump administration approved the sale of Nvidia's (NVDA) H200 AI (artificial intelligence) chip to China, but with a 25% cut in sales.

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Trade Wars Continue to Be a Major Threat for Chip Stocks

According to a Reuters report, a White House official, speaking on condition of anonymity, said that U.S. President Donald Trump had previously threatened to impose a 100% tariff on chips not manufactured in the U.S. as part of his efforts to bolster the domestic semiconductor industry.

In his comments on Wednesday, Trump highlighted that the H200's performance has been exceeded by two generations of Nvidia chips currently in production, namely the Blackwell and Rubin AI chips. "It's not the highest level, but it's a pretty good level, and China wants them and other people want them, and we're going to be making 25% on the sale of those chips, basically," Trump said.

Tariffs on chip exports could hamper the business of Nvidia and other chip companies, given that China is a key market. Earlier, Nvidia said that the Chinese chip market could be worth $50 billion annually.

While Nvidia CEO Jensen Huang told reporters that the company is seeing "very high" interest in its H200 chips from Chinese customers, there have been concerns that China's government may restrict its tech companies from purchasing them. Separately, U.S. lawmakers are questioning Trump's decision to allow the exports of such advanced chips to China. They are concerned about the impact of this decision on America's dominance in the AI chip market and fear that China might use these chips to strengthen its military.

Wall Street's Take on Chip Stocks

Amid AI-led demand for advanced chips, Wall Street has a Strong Buy consensus rating on Nvidia (NVDA), Advanced Micro Devices (AMD), Micron Technology (MU), and Broadcom (AVGO) stocks.

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