By: Express Web DeskJanuary 16, 2026 01:47 PM IST 3 min readAI chips from NVIDIA and AMD are crucial for training large language models that power AI chatbots like ChatGPT, Gemini and others. (Image Source: Reuters)A few hours after the United States and Taiwan reached a trade agreement to build semiconductor chips and manufacturing facilities on American soil, President Donald Trump announced a 25% tariff on select advanced AI chips, citing “significant economic and national security risk”.The move comes almost a month after Trump settled a debate about whether NVIDIA, AMD and Intel should maintain their global lead in AI chips by selling new chips to China or withhold exports. The latest move will require these companies to pay 25% tariff on the AI chips before selling them to approved Chinese customers.“We’re allowing them to do it, but the United States is getting 25% of the chips, in terms of the dollar value,” said Trump. However, the tariff only applies to select advanced AI chips like NVIDIA’s new H200 AI processor and AMD’s MI325X chip. Trump’s actions are a part of the country’s incentive to incentivise chipmakers to manufacture more semiconductors in the US and lessen its reliance on chip manufacturers in other countries like Taiwan.“The United States currently fully manufactures only approximately 10 percent of the chips it requires, making it heavily reliant on foreign supply chains,” says a proclamation by the White House. In a fact sheet, the US said the tariff would only apply to AI chips from NVIDIA and AMD that are imported into the US and then re-exported to other countries, but would not be applicable to chips and devices imported to the US data centres, as well as startups, non-data centre consumer, non-data centre civil industrial, and US public sector applications.Also Read | Donald Trump accepts Nobel medal from Venezuelan opposition leader MachadoHowever, the US hasn’t ruled out broader tariffs on semiconductor imports and products in the near future and said that it is working on a program that would enable companies to manufacture chips locally. Unlike NVIDIA’s previous H20 chip, a lower-performance AI accelerator designed exclusively for the Chinese market, the H200, sold in the global market, is the company’s second fastest AI chip to date.“Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America,” NVIDIA said in an emailed statement to CNN.US companies like NVIDIA, AMD and Intel do design their own chips, but most of them are manufactured by the Taiwan Semiconductor Manufacturing Corporation. While NVIDIA has ramped up its production of H200 chip to meet upcoming demand from China, it is still unclear how the Chinese government will regulate imports from the US.Story continues below this adJust like the US, China is seeking ways to bolster its domestic semiconductor market, but it fears falling behind in the AI race. According to Nikkei Asia, the Chinese government is reportedly working on drafting rules and regulations governing the number of AI chips companies that can purchase from manufacturers like NVIDIA and AMD.Stay updated with the latest - Click here to follow us on Instagram© IE Online Media Services Pvt Ltd