Donald Trump said he would impose a 100% tariff on semiconductor imports, though it would exempt companies that move production back to the United States, as Apple Inc. CEO Tim Cook and the president announced a $100 billion new investment plan from the Oval Office.

"We're going to have a very large tariff on chips and semiconductors, but the good news for companies like Apple is, if you're building in the United States, or have committed to building, without question, committed to building in the United States, there will be no cost," Trump told reporters.

"So in other words, we're going to have a tariff of about 100% on chips and semiconductors. But if you're building in the United States, there's no cost," Trump said. "Even if you're building and not yet in production, given the number of jobs and all the things that are being built, if you're building, there will be no cost."

So far, Trump has exempted electronics including smartphones, computers, and monitors from his country's specific reciprocal tariffs, which will increase for many trading partners on Thursday morning, while indicating that those products will be affected as part of a separate upcoming action on imports covering semiconductors.

The exemption from the levies is a major victory for Apple and Cook, who were bracing for substantial tariffs that could raise the cost of the company's flagship phones and computers.

Apple's $100 billion investment in the U.S. will include a new manufacturing program designed to bring more Apple production to the U.S. The company's American Manufacturing Program partners include glass manufacturers Corning Inc., Applied Materials Inc., Texas Instruments Inc., and others, the company said. Corning will dedicate an entire Kentucky factory to Apple glass production, increasing the company's workforce in the state by 50%, the iPhone maker said. Corning is already an Apple supplier, making glass for the first iPhone at the same factory.

Apple had previously pledged to spend $500 billion in the U.S. over the next four years, slightly faster than previous investments and previously announced plans, adding about $39 billion in spending and 1,000 additional jobs annually. This announcement would bring Apple's cumulative commitment to $600 billion.

The previously planned $500 billion reportedly included work on a new server manufacturing facility in Houston, a supplier academy in Michigan, and additional spending with existing suppliers in the country.

However, the implementation of Trump's tariff decision, which he reportedly did not inform Cook about before the event, could have a significant impact on the tech industry. If Trump's statement means that all products from companies that have committed to building factories or already have factories located in the U.S. are exempt, then many of the industry's largest companies would not be affected.

Several companies, including Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co., Texas Instruments Inc., Micron Technology Inc., and GlobalFoundries Inc., have made public pledges, often in coordination with the White House, to expand their production networks, promising to spend tens of billions of dollars.

Intel Corp., whose ambitious Ohio construction plans have been slowed by losses, still has operational factories in at least three U.S. states: Oregon, New Mexico, and Arizona.

But many so-called chipmakers don't actually own factories, preferring to outsource that function primarily to TSMC and, to a lesser extent, Samsung. Although companies like Nvidia Corp., whose CEO met with Trump earlier Wednesday, and Advanced Micro Devices Inc.

have touted their commitment to sourcing chips from TSMC's new factory near Phoenix, there still isn't enough advanced manufacturing outside East Asia, let alone in the U.S., to meet their needs.

Nvidia, like Apple, has committed to spending heavily in the U.S. and localizing procurement. However, the company is still part of a complex supply chain that spans the globe and can't easily be uprooted and replicated in the U.S. (alg)

Source: Bloomberg