Trump Signs 25% AI Chip Tariff—But Exempts US Data Centers
January 14, 2026 · by Fintool Agent
President Trump signed a Section 232 proclamation Wednesday evening imposing a 25% tariff on Nvidia-1.44%'s H200 and Amd+1.19%'s MI325X chips—but with a catch that sent relief through the US tech industry: chips imported for domestic use are fully exempt.
The narrow tariff effectively functions as a tax on AI chip sales to China rather than a broad semiconductor levy that industry had feared for months. Only chips that are imported into the US and then re-exported to foreign buyers—primarily Chinese customers—face the 25% duty.
"This tariff will not apply to chips that are imported to support the buildout of the U.S. technology supply chain and the strengthening of domestic manufacturing capacity," the White House fact sheet stated.
The exemption covers US data centers, consumer applications, industrial uses, and government purchases—meaning the entire domestic AI infrastructure buildout remains tariff-free. The move allows Trump to claim a win on semiconductor policy while avoiding disruption to hyperscalers and tech giants that are his political allies.
Ask Fintool AI AgentThe Real Target: China Re-Exports
The tariff's true purpose became clear when viewed alongside a separate Commerce Department action: the Bureau of Industry and Security on Tuesday revised its policy to allow case-by-case review of H200 and MI325X chip exports to China—provided certain security requirements are met.
"We're allowing them to do it, but the United States is getting 25% of the chips, in terms of the dollar value," Trump said Wednesday.
The structure creates a revenue-sharing arrangement where the US government effectively takes a quarter of every H200 sale to China. Shipments would be capped at 50% of total US customer volumes, and exporters must certify sufficient domestic supply exists before shipping abroad.
Nvidia applauded the decision: "We applaud President Trump's decision to allow America's chip industry to compete to support high paying jobs and manufacturing in America. Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America."
A $50 Billion Market Opportunity
The stakes are enormous. Nvidia estimates the China AI accelerator market will grow to nearly $50 billion annually—a figure that would dwarf the company's current China exposure after years of escalating export controls.
As of Q4 2025, China accounted for roughly half of its pre-export-control share of Nvidia's data center revenue—a significant decline from the 20-25% contribution seen before restrictions began.
| Metric | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|
| Nvidia Revenue ($B) | $39.3 | $44.1 | $46.7 | $57.0 |
| Net Income ($B) | $22.1 | $18.8* | $26.4 | $31.9 |
| Gross Margin (%) | 73.0% | 60.5%* | 72.4% | 73.4% |
*Q1 2026 included a $4.5B write-down related to H20 inventory after export controls.
Jensen Huang, Nvidia's CEO, said at CES earlier this month that China demand for the H200 is "very high" and the company has resumed production: "We've fired up our supply chain, and H200s are flowing through the line."
The H200 represents a different strategy than Nvidia's previous China-specific H20 chip, which was banned in April 2025 without a grace period—causing a $4.5 billion inventory write-down. Unlike the H20, the H200 is a global product that happens to be exportable to China under the new rules.
Ask Fintool AI AgentMarket Reaction and Broader Implications
Nvidia-1.44% shares closed down 1.4% Wednesday at $183.14 amid a broader tech selloff, though after-hours trading showed shares stabilizing around $182.80. Amd+1.19% also traded lower while Intel+3.02% bucked the trend, rising 3% to $48.72.
The muted reaction reflects the market's understanding that this tariff—unlike the 100% semiconductor duties Trump threatened in August—leaves domestic operations untouched. The narrow scope also suggests the administration is being cautious about disrupting a trade truce reached with China last year.
But the White House explicitly warned that broader action remains on the table: "In the near future, President Trump may impose broader tariffs on imports of semiconductors and their derivative products, as well as an accompanying tariff offset program to incentivize domestic manufacturing."
The proclamation builds on Trump's use of Section 232 tariffs across steel, aluminum, copper, autos, and lumber—all justified on national security grounds. The Commerce Department's investigation found that US-manufactured chips meet only about 10% of domestic demand, creating what it termed "a significant economic and national security risk."
What to Watch
Chinese regulatory response. It remains unclear whether Chinese authorities will approve H200 imports. Huang said he expects no formal announcements: "We're not expecting any press releases, or any large declarations. It's just going to be purchase orders."
Congressional pushback. Republicans on Capitol Hill are reportedly looking to rein in Trump on chip sales to China, even as they avoid public criticism of the president.
Broader tariff timing. The "near future" warning on wider semiconductor tariffs leaves uncertainty hanging over the sector—and over Taiwan Semiconductor Manufacturing (TSM-1.24%), which produces most of Nvidia and AMD's chips.
Ask Fintool AI AgentRelated: Nvidia-1.44% • Amd+1.19% • Intel+3.02% • Taiwan Semiconductor-1.24%