Uncertainty looms over AI companies regarding the potential impact of Trump-era tariffs. The murky situation is causing turbulence not only for the AI sector but also for the broader technology landscape.
The stock market is experiencing volatility, with Nvidia’s shares dropping by 7.59% and TSMC declining by 7.22%. While insiders in San Francisco may regard this as inconsequential, those in Washington are expressing alarm. A key issue at hand is the exemption status of GPUs, essential for AI and other industries, from these tariffs. Clarifying the situation proves to be quite challenging.
Researchers working on AI projects are hopeful for a tariff exemption. A source within a prominent AI lab remarked, “I fully expect this to be a situation where Trump grants favored companies a pass, akin to what he did with Apple during his earlier term.”
Contrarily, the mood in Washington is one of uncertainty. The Trump administration has outlined an exemption for semiconductor chips integral to GPUs, but it appears that complete electronic products incorporating these chips will still face tariffs. This poses a dilemma for companies reliant on GPUs for various functions, as they often require entire systems rather than just individual chips. Chris Miller, a professor at Tufts University and author of Chip War: The Fight for the World’s Most Critical Technology, noted that “Most AI GPUs are imported not as chips but as servers, largely from Taiwan,” suggesting a potential tariff rate of 32% set to take effect on April 9th.
Typically, government agencies would provide guidance on such matters. However, when approached for clarification, a public affairs official at NIST pointed inquiries to the White House, which has not responded to requests for comment. Similarly, the U.S. Trade Representative, responsible for managing tariff policies, has remained silent.
Amid this chaos, tech lobbyists in Washington are quite aware of the unpredictable nature of the Trump administration. Vague and seemingly arbitrary tariffs amplify their concerns. “Everyone’s asking for clarity,” one lobbyist from a major tech firm relayed to Technology News. “So far, people think we’re okay, but there’s no definitive answer yet.”
This uncertainty concerning GPU status affects not only AI firms but also prominent tech giants with extensive inventories of these devices, including Amazon, Google, and Microsoft. These corporations rely heavily on GPUs for their cloud operations. Investor sentiment has reflected doubts about profit margins, as the so-called “Magnificent Seven,” which includes these firms, has collectively lost over $1 trillion in market capitalization since tariffs were announced.
The AI sector feels it might receive preferential treatment from Trump. Recently, OpenAI’s Sam Altman, along with other tech leaders, appeared with the president to unveil a $500 billion datacenter infrastructure initiative. Yet, the current ambiguity regarding GPUs and the unpredictability of tariffs could undermine this confidence or necessitate renewed efforts to engage with Trump.
“If the tariffs are unchanged, we should prepare for a significant increase in the price of electronics.”
In a bid to mitigate tariff impacts, Nvidia has begun relocating some of its manufacturing operations to the U.S. The company is reportedly in the final stages of establishing production of its Blackwell AI GPU chip at TSMC’s facility in Arizona. Nvidia CEO Jensen Huang indicated that the company is diversifying its manufacturing locations, which may reduce the short-term effects of tariffs while planning for domestic production in the long run.
However, for AI labs, hyperscale cloud providers, and individual PC builders who require GPUs, the situation could lead to significant cost increases. Miller commented, “Trying to produce every segment of electronics domestically will lead to staggering increases in costs, especially in the short-term, as many needed capabilities do not exist locally.” Furthermore, tariffs on raw materials essential for manufacturing and potential retaliatory actions, such as China’s recent export restrictions on rare earth minerals, amplify these challenges, as the U.S. imports the majority of these materials from China.
Miller warned, “If the tariffs are unchanged, we should prepare for a significant increase in the price of electronics.”
Ultimately, maintaining favor with Trump may prove more critical than logical reasoning. Amazon founder Jeff Bezos has allied himself with the new administration, a pivotal move for companies like Anthropic, which relies on Amazon for computing resources. However, these arrangements remain precarious. A damaging article from Bezos’ The Washington Post could jeopardize Amazon’s, and consequently Anthropic’s, tariff exemptions. Similarly, Anthropic also relies on Google services, whose CEO Sundar Pichai has publicly supported Trump.
Additional complications loom for these companies. Economic recession could severely strain the tech sector. “The indirect effects of the tariffs could still be detrimental,” a source from an AI lab cautioned.
In response to market declines, tech executives are reportedly gathering at Trump’s Mar-a-Lago resort, as noted by journalist Kara Swisher. Their aim is to gain insights into the tariff situation and potentially advocate for exemptions.
