If you thought a 25% tariff on advanced semiconductors sounded aggressive, the Trump administration has some news for you: this is just the beginning.

Consider This a Warning Shot

A White House official told Reuters on Thursday that the newly imposed 25% national security tariff on certain high-end chips represents "phase one" of what could be a broader crackdown. Speaking anonymously, the official made clear that additional measures are on the table depending on how negotiations with foreign governments and chipmakers unfold.

And just in case anyone missed the subtext, the official reminded everyone that Trump has previously floated the idea of slapping tariffs as high as 100% on semiconductors made outside the United States. That's not a typo—one hundred percent.

Which Chips Are Getting Hit?

The tariffs, formally announced Wednesday by the Commerce Department, apply to a roster of high-performance semiconductors that power artificial intelligence applications. That includes Nvidia Corp.'s (NVDA) H200 AI processor and Advanced Micro Devices, Inc.'s (AMD) MI325X chip—basically the kind of hardware that's become essential for running cutting-edge AI models.

This action follows a nine-month investigation under Section 232 of the Trade Expansion Act of 1962, the legal provision that lets the president impose trade restrictions when national security is allegedly at stake.

Taiwan Cuts a Deal

While the tariff threats loom large, the Trump administration did manage to close a significant agreement with Taiwan on Thursday. Taiwanese chip and technology companies committed to investing at least $250 billion to expand production capacity on U.S. soil, backed by another $250 billion in credit guarantees from Taiwan's government.

In exchange, Taiwan gets something valuable: the U.S. agreed to cap "reciprocal" tariffs at 15% instead of the previously threatened 20%, and certain goods will see their duties eliminated entirely. Call it the carrot-and-stick approach to semiconductor diplomacy.

Meanwhile, U.S. Manufacturing Keeps Struggling

The timing of these maneuvers is notable given the state of American manufacturing. The Institute for Supply Management's Manufacturing Purchasing Managers' Index dropped to 47.9 in December—the weakest reading of 2025 and the sector's tenth consecutive month of contraction.

Survey respondents pointed to tariffs and trade policy uncertainty as major factors dampening demand and complicating operations. So while the administration pushes for more domestic chip production, the broader manufacturing sector is sending distress signals.

As for Nvidia (NVDA), the stock shows negative price momentum in both the short and medium term, though it maintains a positive long-term trend. The company currently carries a weak Value ranking in market assessments.