Semiconductors are the fourth most traded good globally and impression a number of shopper items. Semiconductor provide chain is complicated, with completely different economies dominating completely different components. US administration is conducting investigations into semiconductor provide chains; threatening tariffs. US trade representatives want home incentives over tariffs, Normal Chartered’s economists Madhur Jha and Ethan Lester report.
Tariff impression could possibly be far-reaching
“US reciprocal tariffs on 2 April excluded semiconductors as these are topic to separate investigations that might lead to 25% tariffs being imposed as soon as they’re concluded. US officers have indicated that these investigations are ongoing given nationwide safety issues and the need to dominate the AI growth race, regardless of the latest détente in commerce tensions. Semiconductors are the fourth most traded good globally, accounting for >4% of 2024 world exports. This excludes downstream related sectors, three-quarters of which comprise electronics and different segments of the semiconductor trade.”
“The US dominates round half of the semiconductor provide chain. Nonetheless, the availability chain is complicated, with a number of chokepoints and a small variety of economies dominating completely different components of it. Whereas China is the main target of multiple investigation into semiconductors, different economies like Mexico, Taiwan, Japan and Korea are deeply built-in into the semiconductor provide chain and are weak to greater tariffs.”
“US trade representatives have indicated a choice for extra home incentives over a blanket 25% tariff given the complexity of the availability chain and the cascading impression on broader trade sectors. Globally, the impression of semiconductor tariffs is more likely to be far-reaching given semiconductors’ more and more necessary position in a variety of sectors. Evaluation means that for the US, a 25% tariff on semiconductors may decrease GDP development by 0.2ppt in yr one.”
