President Donald Trump formalized a high-stakes "tax-and-trade" strategy for the semiconductor industry on Wednesday, signing a proclamation that imposes a 25% ad valorem tariff on high-performance AI chips produced abroad that transit through the U.S. before being exported to international customers.
The order specifically names Nvidia’s H200 and AMD’s MI325X as "covered products."
This decision marks the official implementation of a deal teased in late 2025: the U.S. will lift the blanket ban on selling these advanced processors to China, provided they are sold to "vetted" customers and the U.S. Treasury collects a 25% cut on every shipment.
The administration is using Section 232 of the Trade Expansion Act of 1962 to justify the move, citing that heavy reliance on foreign-made chips is a "national security risk."
Currently, the U.S. manufactures only 10% of the chips it requires.
To avoid harming the domestic tech boom, the proclamation includes broad exemptions for chips used within U.S. borders.
Despite the new levy, Nvidia (NASDAQ:NVDA) signaled strong support for the policy.
The company had previously warned that total bans would simply hand market share to Chinese state-backed competitors like Huawei.
By paying the 25% "transit fee," Nvidia can now tap into a massive backlog of orders from Chinese tech giants like Alibaba, ByteDance, and Tencent, who have been desperate for H200-level compute power.
Meanwhile, Beijing is reportedly drafting its own guidelines to manage these imports.
According to Nikkei Asia, the Chinese central government plans to set quotas on how many foreign chips domestic firms can purchase.
This "dual regulation" creates a delicate balance: China wants the high-end hardware to remain competitive in the AI race but fears becoming too dependent on American-designed silicon.
Commerce Secretary Howard Lutnick has been granted wide discretion to adjust these tariffs or grant further exemptions over the next 90 days.
The White House hinted that this is only the first phase, warning that broader tariffs could follow to force companies like TSMC to move more of their advanced fabrication facilities to American soil.