From Subsidy Carrots to Tariff Sticks: A Policy Gear-Shift

Unlike the Biden-era Chips and Science Act, which tried to pull capacity home with subsidies, Trump’s move is a “hard whip”: drive import costs sky-high and then offer a lifeline to firms willing to localize production. “If you build a factory in the United States, you won’t have to pay—even if you’re still under construction, you won’t have to pay,” the president stressed.Apple promptly announced an additional US$10 billion for U.S. manufacturing, lifting its total domestic investment to US$600 billion and making it one of the first showcase beneficiaries.

Rising Supply-Chain Pressure: East Asian Capacity Faces Relocation Jitters

Foundry and back-end facilities across East Asia are first in the line of fire. Whether it is mature-node capacity in mainland China or cutting-edge nodes in Taiwan and South Korea, any chip destined for the U.S. that cannot complete its final processing step domestically now faces a sudden surge in costs. Automakers and consumer-electronics brands may seek temporary relief under “component exemptions,” yet a broad increase in chip prices would still ripple through to retail tags. Washington admits the exemption window is designed to avoid an inflation spike while plants are being built.

At the same time, having a U.S. fab is suddenly a talisman. TSMC’s Arizona campus, Samsung’s second Texas line, and Intel’s Ohio “Silicon Corridor” are either under construction or expanding, keeping customers such as Nvidia and AMD relatively sheltered in the short run. Analysts therefore see the policy less as a clean break from overseas supply and more as a shove for stragglers to “get on board.”

Immediate Market Response: “Made-in-America” Names Take the Lead

Investors piled into would-be exemption winners within minutes. In after-hours trading Apple added another 3 percent on top of a 5 percent regular-session gain, while Nvidia and Intel also rallied as the street concluded that the carve-out largely protects industry leaders’ margins. By contrast, an ETF tracking Asian semiconductor stocks fell, showing that money has begun to price in export friction.

Crucially, the administration has not yet specified what level of investment secures an exemption—does adding one extra production line qualify, or must firms commit to a full cutting-edge fab? The ambiguity arms the White House with bargaining power and leaves room for future tweaks. Brokerages therefore advise investors to keep a close eye on the forthcoming “detail drop” and on the pace at which each company actually deploys capex, which will reveal how costs are passed on and when margins can heal.