American technology giants pouring billions into artificial intelligence (AI) infrastructure may soon encounter an obstacle at home: a proposed expansion of US tariffs that may significantly elevate the cost of building data centres. According to a report by The Politico, the Trump administration is weighing a sweeping round of duties on semiconductors. Citing eight people familiar with the discussions, the report says that the plan under review will broaden import taxes beyond bare chips to include finished hardware such as servers, consumer laptops and gaming systems.Commerce Secretary Howard Lutnick is said to be advocating for a framework that links tariff exemptions for foreign firms to commitments to invest in domestic fabrication plants, with an additional phase-in period under review.It is noteworthy that Trump has targeted Europe, China and Canada with a series of tariffs and trade pressures that have escalated tensions between the nations. In Europe, the Trump administration has condemned tech laws and regulatory policies; Beijing, in the past, has stopped exports of rear Earth metals after Trump imposed tariffs on China and Canada recently announced retaliatory tariffs on goods, including steel and aluminium.
‘Major tech companies already taking measures’
The proposal has sparked alarm across Silicon Valley with major tech companies already said to be navigating severe shortages of high-performance chips, a situation made worse by unprecedented demand for AI data centers.While industry representatives back long-term domestic manufacturing, they emphasise that cutting-edge fabrication facilities cost billions and take years to become operational. In the interim, American cloud operators remain dependent on overseas supply chains in South Korea, Malaysia and Taiwan – which alone produces over 90% of top-tier logic chips.Industry leaders warn that taxing foreign silicon will negatively impact the primary resource fueling the compute boom, potentially forcing companies to scale down server campus investments. With TSMC projecting that its Arizona facilities will account for roughly 30% of its advanced output even after huge investments, tech leaders warn that proposed duty-free quotas will fall well short of data center demands, the report emphasised.
