The Trump administration has created turmoil in the semiconductor market by imposing a 25% tariff on imports of high-end artificial intelligence chips, including Nvidia H200 and AMD MI325X processors. The decision came just 24 hours after approving the export of the same chips to China. This contradictory move reflects the conflicting priorities between incentivizing domestic semiconductor manufacturing and maintaining the global competitiveness of American chipmakers. ## Tariff scope and exemptions The tariff, announced through a national security proclamation, follows a nine-month investigation and targets AI semiconductors that meet specific performance benchmarks. The stated goal is to incentivize domestic production, at a time when the United States produces only about 10% of the semiconductors it needs. However, exemptions have been provided to avoid disrupting domestic technology infrastructure. The tariff will not apply to AI chips imported for US data centers, startups, non-data center consumer applications, non-data center civil industrial applications, or for use in the US public sector. ## Market reaction and industry silence Shares of Nvidia, AMD, and Qualcomm all traded slightly lower in after-hours trading following the tariff announcement. Nvidia did not respond to requests for comment on how it plans to address the conflicting policy signals. AMD issued a brief statement confirming that it complies with all US export control laws and policies, but did not address the business implications of the tariff. ## Broader strategy and domestic production goals The AI chip tariff represents one component of a broader Trump administration push to reshore semiconductor manufacturing in the United States. The administration emphasizes that the current US reliance on foreign chip manufacturing constitutes a significant risk to economic and national security.