US launches semiconductor probe to explain away tariff exemptions
To somehow support claims that the tariff exemption is not an exemption at all, the White House has announced an investigation into the entire semiconductor market segment.
The White House is investigating semiconductors ahead of introducing tariffs on them
On April 2, 2025, Trump announced his "Liberation Day" slew of tariffs for which there would be no exemptions. On April 9, he granted Apple an exemption.
But following the worldwide recognition that this was an exemption, over the weekend of April 10 and 11, Trump proclaimed that it was nothing of the sort. He said "there was no Tariff 'exception'... they are just moving to a different Tariff 'bucket'," as if it were all part of the plan.
At the same time, Trump did also promise to launch a national security trade investigation into the "whole electronics supply chain." Now according to CNBC, the White House has announced exactly that.
Except it hasn't, not exactly. The announcement is in a document on the Federal Register that can be read, but officially will not be published until April 16. In it, the White House claims that:
On April 1, 2025, the Secretary of Commerce initiated an investigation under section 232 of the Trade Expansion Act (19 U.S.C. 1862) to determine the effects on national security of imports of semiconductors, semiconductor manufacturing equipment, and their derivative products. This includes, among other things, semiconductor substrates and bare wafers, legacy chips, leading-edge chips, microelectronics, and SME components.
It's not clear why an investigation begun on April 1 would not be announced until April 15, and not officially enacted until April 16. Nor how it can have been started before the "reciprocal" tariffs were announced, but then itself be announced after the tariffs were reversed with the Apple exemption.
Nor is it clear why technology firms were hit with the "reciprocal" tariffs if it were already planned that they would come under the different "bucket" of semiconductor tariffs.
Nonetheless, the filing is very clear that the government is seeking submissions from interested parties. They must submit comments "no later than [INSERT DATE 21 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]."
The investigation wants to determine the current and projected semiconductor demand in the US, plus to what degree local production can meet that. The filing then has some vaguely-worded clauses about "the role of foreign fabrication... in meeting US demand," and the "concentration of United States imports... and the associated risks."
There are many other issues listed in the filing, but they all come down to what the US needs and what the US can make itself.
But the key part is number 9 in a series of 14 points. It says the investigation concerns "the impact of current trade and other policies on domestic semiconductor and SME production and capacity, and whether additional measures, including tariffs or quotas, are necessary to protect national security."
It's wrong to assume the outcome of any investigation, but in "21 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER," technology businesses can expect tariffs and perhaps quotas. That's not an educated guess: commerce secretary Howard Lutnick has already prejudged the investigation and said that semiconductor tariffs will be coming.
Maybe it's necessary, maybe there are security risks. And so nothing deters foreign spies like making US businesses and consumers pay more for the privilege of being spied on.
Note that Lutnick said the semiconductor tariffs would be "coming in probably a month or two." Trump has now said they would come next week, according to BBC News.
April 1, April 16, next week, a month or two, no exemptions, Apple exemptions, again no exemptions, there is no plan to this. Which means despite the markets rising at the news of Apple exemptions, they are going to continue to be volatile for at least weeks longer.
And, regardless, the 10% tariffs to somehow stop the fentanyl trade are still in place for these goods. This is still more than was being applied before the first shot was fired in the trade war almost two weeks ago.
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Remember when you were a kid, how there was that one other kid that nobody wanted to play with because they always hit? Trump is that kid. He doesn’t ever use diplomacy. He doesn’t try to negotiate. It’s always do this Or Else. He and the US are going to find that a lot of companies are going to choose the Or Else and walk away. The US is going to go from having the semiconductors it needs for home, industry, and defence, albeit some from questionable sources, to a lot of those simply not being available. While the CHIPS act was making progress on bringing semiconductor manufacturing to US shores, that is in the process of being killed. These threats on the other hand will have the opposite effect. More companies, prodded by these tactics, and governments around the world that don’t have the US’s best interests at heart, will be walking away.
The US is no longer in a position to bully and threaten the world. The world has grown and the US is now only a part of it. Trying to demand things from the rest of the world, use tariffs, and threats to get what it wants, will not work, and will backfire making the US poorer, more alone, and weaker. They put the US at a great disadvantage compared to the rest of the world. They also will make countries like China stronger and more trusted as they prove to be the more reliable partner.
They have already decided on the outcome and response. This is just a show to make it look like they are going through a proper process, to give them a fig leaf to excuse what they are already planning on doing.
The only thing that's new is the magnitude of what's going on. Previous administrations have never violated the law in such an egregious fashion on so many controversial issues. But then, this is what America wanted. After all we did elect a convicted felon.
A good example of previous violations is the US highway system. The US Constitution envisions a lean and mean federal government. The Constitution enumerates the few things the Federal government is responsible for, and explicitly reserves everything else to the states. There is nothing in the Constitution giving the Feds the responsibility or authority to create a national highway system. At one point the government tried to justify it as being for national defense, but that's no longer applicable. The US military can deploy via air to anywhere in the world. Trying to do a domestic deployment by road would only slow things down. We don't have roads to Afghanistan, Iraq, etc., yet we were able to wage war there.
The Roman Empire as history knows it would not have existed without a comprehensive road system, read up on that as well. A comprehensive system of roads connecting the entirety of its interior would indeed be critical to defense of US territory in the event of invasion. That such a crisis is extraordinarily unlikely today*, 70 some years after the inception of the interstate highway system, does not change that simple fact.
Imagine that you're in a war and you're on the battle field and not happy with how things are going. You decide that the way to turn this around is attack your supply lines. And then turn on your allies. And start deporting people from your army. This guy is a toddler with an undeveloped brain cosplaying as a dictator.
The tenth amendment explicitly states that powers not specifically granted to the federal government by the Constitution are reserved for the states. This tells us that the Federal Government does not have power over everything, and that something must be reserved to the states.
Yes, the commerce clause allows the Feds to regulate interstate commerce. While roads are helpful to commerce, they are not, in themselves, commerce.
One can make the argument that just about anything can be tied to interstate commerce, and therefore the Feds have authority over everything. The tenth amendment makes it clear that this interpretation is wrong.
Consider the situation where someone wants to grow marijuana in their backyard for personal consumption. This clearly has nothing to do with interstate commerce. Yet, the Feds claim that they have the authority to regulate this, as the grower might change their mind, and sell the marijuana to someone in another state. By this interpretation the commerce clause would cover everything, as anything can lead to interstate commerce. That interpretation violates the tenth amendment.
Now we can have a discussion on whether Federal regulation of marijuana is good or bad, but that's a separate discussion from whether or not the Constitution allows the Feds to regulate it.
Similarly, during the 1970s energy crisis, the Feds instituted a nationwide speed limit of 55 mph. Whether or not this was good or bad, the Constitution clearly does not give the Feds the authority to regulate speed limits on state and local roads. However, the country turned a blind eye to the Constitutional issues as we were in a gasoline crisis. The shortage was so bad that many areas had to resort to even/odd gas rationing (if your license plate was an odd number you could only buy gas on odd numbered days).
Keep in mind, that when President Eisenhower created the "The Dwight D. Eisenhower National System of Interstate and Defense Highways", he understood that the commerce clause didn't give him the authority. His claim was that it was for national defense (A responsibility which is delegated to the Feds). Therefore, the highway system is designed to allow for the movement of tanks. However, the realities of the modern world make this concept obsolete. Today in times of conflict, we transport troops and gear by plane, not land.
One can make a very reasonable case that a national highway system is a good thing, and helpful to interstate commerce. However, that is a separate discussion from whether the Feds have the Constitutional authority to create such a system.
Modern factories require workers skilled in the building and maintenance of complicated precision machinery. That requires a significant investment in education. We are in the process of disbanding the Dept. of Education. If we build factories we would need foreign trained workers. That's not happening under our current policy of arbitrarily deporting non-citizens who are legally in the USA.
We are working very hard at convincing the smartest and brightest of scientists to move their research to countries outside the USA. Most likely China or Russia as they have the most money available for research. If you are a scientist in the USA, and long term research funding can be cutoff anytime, seemingly without reason. Thus destroying years of hard work and research. If you are a non US citizen, you can be sent home without warning, even if you are here legally, and have all your proper paperwork. One of the things that made America great was that we had the best scientist and led the world in research. That gave us a technological lead over the rest o the world. We are giving that lead to China and Russia.
Keep in mind that we won World War II, and were able to land man on the moon, because the best and brightest scientists left Germany and came to America. Now Trump is encouraging them to go to China and Russia. Let that sink in for a moment.
Are Trump's policies really what's best for America in the long term?
Congress could simply decide to take back that authority, but no one in Congress has the backbone to stand up to Trump.
Trump claims that he has the authority to impose/modify tariffs under the International Emergency Economic Powers Act of 1977 (IEEPA). However, that act does not mention tariffs, and does not appear to give the President authority to impose or modify tariffs. Even if it did, he would only have such authority under a national emergency. Reasonable people can question whether a trade imbalance is a qualifying "emergency", or even an emergency of any sort. In fact, most economists believe that a trade deficit isn't even a problem.
For those that are actually interested in the underlying legal issues there's a good YouTube discussion at https://www.youtube.com/watch?v=gtJ-uUzXupI
A big challenge is that even if the courts find that Trump's policies are illegal, there is not much they can do about it. The courts do not have the ability to enforce their orders. That's left to the US Marshall Service. The Marshalls are under the executive branch, which is headed by Trump. Furthermore, SCOTUS recently determined that the President is essentially immune from criminal prosecution. The President can issue Federal pardons to anyone he wants. Thus the courts are powerless against Trump and his policies.