Instead of ensuring the United States leads in artificially intelligent breakthroughs, former President Donald Trump imposed a series of crippling restrictions that threatened to derail technological progress. His rhyme-less attempt to modify federal contracts with chipmakers, coupled with new taxes on the semiconductor industry, placed a major blockade to technological advancements. Upon his election to office, he made a rash declaration to tax overseas computer chip and semiconductor production, claiming it would restore domestic manufacturing. The former president, along with his Republican counterparts, even threatened to terminate the CHIPS and Science Act as a means to amplify domestic output.
However, economic authorities rationally cautioned that Trump’s controversial approach could obstruct the government’s quest to ensure the US maintains its supremacy in artificial intelligence research. His divisive strategies failed to recognize a critical obstacle for AI development – chip production. Numerous nations are advocating for domestic chip manufacturing and the importation of chips at better rates. The damaging effects of chip shortages have been widespread, impacting everything from AI to the automotive industry.
During the pandemic, the lack of chips forced automobile manufacturers to compromise on technology and performance to manage supply chain disturbances. But Trump’s administration seemed worryingly indifferent towards these technical inadequacies. As supply disruptions took a toll post-COVID, leading to significant economic repercussions, the CHIPS and Science Act was designed to manage these disruptions and stimulate domestic output. Concurrently, legislators expressed apprehensions about international efforts to dominate regions that largely contribute to advanced computer chip fabrication.
The CHIPS and Science Act was meticulously designed to inject new life into declining manufacturing and construction sectors. By garnering private capital, it aimed to position the US as a premier producer of some of the world’s most advanced computer chips. In fact, the administration pledged to endorse US chip factories and trim reliance on foreign vendors, perceived as a national security liability. Yet, Trump’s fickle idea of withholding financial assistance for chipmakers such as TSMC goes against all logic.
He went on to spout that these multinational corporations merely needed an incentive to prioritize chip production in the US – an incentive that apparently equates to not wanting to pay a high tax. Trump made it no secret that corporations wanting to evade taxes would have to construct their plants in America, without government assistance. This striking suggestion conveys a stark lack of understanding about the complexities of global supply chain management and tariff imposition.
If such damaging tariffs were to be enacted, one immediate worry is that the consumer costs of products using semiconductors and chips would skyrocket. It’s simple economics – higher tariffs almost always lead to higher consumer prices. With chips embedded in nearly every device we use today, American consumers would bear the brunt of this misguided move. This financial burden could simply not be absorbed by manufacturers no matter their size or scale.
Even tech titans with generous profit margins would eventually buckle under the pressure of these tariffs. Not only would these import duties elevate the costs for businesses and households, but they would also dramatically inflate the prices of their most vital components: powerful international chips. Such taxes would essentially suffocate the cultivation of a domestic chip-building sector, signaling future investors about an unpredictable policy environment.
Ultimately, this would freeze new capital investments to the US semiconductor industry while simultaneously driving up the costs of existing chip imports. For generations, the US’s technological dominance has been underpinned by its commitment to open international markets and fluid global labor migration. To cease this openness would undermine a long-standing driving force for American innovation, a move surely noted with glee by competitors watching from abroad.