Nvidia welcomes new US tariff on AI chips headed to China

On Wednesday, President Donald Trump signed a proclamation that imposes a 25% tariff on advanced AI semiconductors produced outside the US that pass through the US before being exported to customers in other countries. This executive order establishes a 25% tariff rate on these specific transit shipments, targeting advanced AI semiconductors manufactured abroad that utilize US transit routes before reaching international markets. The policy formalizes a key regulatory shift for advanced AI semiconductors that pass through the US, altering the economics of shipping these components to international buyers.

The regulation directly impacts semiconductor companies, including Nvidia and AMD. The tariff applies to specific advanced AI chip models, such as Nvidia’s H200 and AMD’s MI325X, which are designed for artificial intelligence applications. Despite the new 25% tax on these exports, Nvidia publicly cheered the administration’s move. The tariff formalizes a key component of the US Department of Commerce’s—the US trade regulator—decision to allow Nvidia to ship its H200 chips to vetted customers in China. An Nvidia spokesperson applauded the decision, stating: “We applaud President Trump’s decision to allow America’s chip industry to compete to support high-paying jobs and manufacturing in America. Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America.”

The proclamation highlights the domestic manufacturing limitations of the US, stating that the country currently fully manufactures only approximately 10% of the chips it requires, making it heavily reliant on foreign supply chains. While the US implements these export tariffs, the Chinese government is drafting its own rules to regulate semiconductor imports. According to reporting from Nikkei Asia, the Chinese central government is working to draft rules and guidelines regarding how many semiconductors Chinese companies can purchase from overseas. This drafting process represents an effort by China to manage its foreign chip imports as it navigates the international technology landscape, balancing its domestic industry goals with its reliance on international chip manufacturers.

Why it matters

This tariff formalizes the U.S. Department of Commerce’s framework for allowing Nvidia to ship H200 chips to vetted customers in China, while simultaneously setting new cost structures for competitors like AMD.