Economic Consequences of Section 232 Tariffs on Semiconductor Imports

The Trump administration issued an executive order in January 2026 imposing a 25 percent Section 232 tariff on certain advanced semiconductors.

• Main action: The January 14, 2026 executive order imposed an immediate 25 percent ad valorem duty on a narrow category of advanced computing chips and signaled a possible broader phase 2 at a “rate of duty that is significant.” ITIF models that a sustained 25% tariff would produce a cumulative $1.6 trillion loss in U.S. GDP (3.9%) over 10 years, reduce ICT consumption by $12.5 billion, and lower GDP per capita by $170 in year 1 and $4,825 cumulatively by year 10. The United States imported $48.1 billion of semiconductors in 2025 (baseline used in analysis).
• Background and recommendations: ITIF recommends removing blanket semiconductor tariffs, extending the investment tax credit (ITC) — now 35% — through 2030 and expanding it to semiconductor research and design, and requiring future Section 232 tariffs to include annual reviews and automatic expiration. The report also urges that tariff offsets under phase 2 be made available to firms engaged in semiconductor R&D and AI/data-center investment. The ITC is noted as scheduled to expire at the end of 2026.