The Trump administration is considering a sweeping semiconductor policy that would force U.S. chip companies to produce domestically at a 1:1 ratio with customer imports - or face tariffs. The unprecedented approach could reshape global supply chains but risks short-term industry disruption as domestic manufacturing struggles to scale.
The semiconductor industry just got hit with Washington's most ambitious reshoring proposal yet. The Trump administration is reportedly weighing a ratio-based tariff system that would penalize U.S. chip companies if they don't manufacture domestically at the same volume their customers import from overseas, according to sources familiar with the discussions who spoke to the Wall Street Journal.
The 1:1 policy represents a dramatic shift from traditional trade approaches. Instead of blanket tariffs or subsidies, the administration wants to create direct consequences for companies that lean too heavily on foreign chip suppliers. Companies that can't match their domestic production to customer import volumes would face tariff penalties, though the timeline for compliance remains unspecified.
This isn't Trump's first semiconductor salvo. The president has been telegraphing chip tariffs since August, but the ratio approach adds a new wrinkle that could fundamentally alter how companies structure their supply chains.
The policy's success hinges on a massive assumption: that domestic manufacturing can scale fast enough to meet demand without crippling the industry. Reality tells a different story. Intel's flagship Ohio fabrication plant, originally scheduled to open this year, has been pushed back repeatedly and now targets a 2030 launch. The company has continued pulling back on manufacturing projects as costs mount and technical challenges persist.
Even Taiwan Semiconductor Manufacturing Company (TSMC), the world's most advanced chip manufacturer, is taking a cautious approach to U.S. expansion. The company committed $100 billion over four years for American facilities in March, but offered few specifics on production timelines or capacity targets.
The disconnect between policy ambition and manufacturing reality could create significant market disruption. Semiconductor supply chains are among the world's most complex, with chips often crossing multiple borders during production. A sudden shift to domestic requirements could trigger shortages in everything from smartphones to data center equipment while new facilities struggle to come online.
