Two Presidential Proclamations released yesterday address the Trump Administration’s actions arising out of the recently concluded investigations of imported semiconductors, processed critical minerals, and their respective derivative products under Section 232 of the Trade Expansion Act of 1962. Whereas targeted tariffs will apply to a limited group of imported semiconductors beginning today, the plans of action otherwise require the United States Trade Representative and Secretary of Commerce to negotiate agreements with like-minded countries to address national security vulnerabilities. Notably, the Proclamation on critical minerals does not impose Section 232 tariffs. However, the respective Proclamations each indicate that additional tariffs or other trade restrictions may follow in the future.
Semiconductors Investigation & Findings
Last April, the U.S. Department of Commerce Bureau of Industry and Security (BIS) initiated a Section 232 investigation into the whether imported semiconductors and derivative products threaten U.S. national security. Although the scope of that investigation was never precisely defined, Commerce referenced “among other things, semiconductor substrates and bare wafers, legacy chips, leading-edge chips, microelectronics, and SME components,” as well as semiconductor manufacturing equipment. BIS’ Section 232 report was transmitted to the President on December 22, 2025, within the 270-day statutory time period. Per the Proclamation, BIS concluded that imports of these products threaten US national security and the US economy, given limited US production capacity and the role of semiconductors in US “economic, industrial, and military strength.” BIS concluded that the US “currently fully manufactures only approximately 10 percent of the chips it requires.” However, the Secretary’s report has not yet been publicly released, although the statute ultimately requires publication of a public version in the Federal Register.
Possible Multi-Phase Semiconductor Action
The President has 90 days after receiving a Section 232 report to determine, inter alia, “the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.” Here, BIS’ report recommended a two-phase course of action:
- Phase One: The United States would continue ongoing trade negotiations with foreign jurisdictions that have the potential to strengthen the United States semiconductor industry, but immediately impose a 25 percent ad valorem tariff on “a very narrow category of semiconductors that are an important element of my Administration’s Al and technology policies,” except when such chips are “imported to support the buildout of the United States technology supply chain.”
- Phase Two: The United States imposes “broader tariffs on semiconductors, at a rate of duty that is significant,” but incorporating “a tariff offset program to enable companies investing in United States semiconductor production and certain parts of the United States semiconductor supply chain to obtain preferential tariff treatment.”
While the Proclamation does not expressly state that it will follow the entirety of BIS’ proposed two-phase course of action, the immediate actions set forth therein correspond closely to the summary description of “Phase One,” and the accompanying fact sheet mentions the possibility of “broader tariffs” and an “offset program” in “the near future.”
Semiconductor Negotiations and Limited Tariffs, for Now
Specifically, the Proclamation provides for negotiations, limited tariffs, and future updates to the Section 232 semiconductors framework.
Negotiations are to be “jointly” undertaken by USTR and the Secretary of Commerce “to address the threatened impairment of the national security with respect to imported semiconductors, semiconductor manufacturing equipment, and their derivative products.” In other words, the United States will undertake negotiations with key countries in the semiconductor supply chain (e.g., Taiwan). This approach, of continuing negotiations before implementing broad baseline tariffs, differs from the rollout of other recent Section 232 tariff regimes. It may better enable interested U.S. trading partners to position themselves advantageously, relative to one another. An update on the status of these negotiations is due to be provided to the President no later than April 14, 2026.
Beginning for products entered today or later, 25% tariffs will apply to certain “advanced computing chips,” i.e., those that are (A) classified under 8471.50, 8471.80, or 8473.30, and also (B) fall within the performance specifications set forth in the accompanying Annex. By comparison, the scope of coverage of these Section 232 tariffs does not overlap at all with Section 301 semiconductor tariffs on products of the People’s Republic of China, which are limited to certain subheadings under Chapters 28, 38, and 85 of the Harmonized Tariff Schedule of the United States.
Notably, the fact sheet accompanying the Section 232 semiconductor tariffs describes the tariffs as applicable to “the NVIDIA H200 and AMD MI325X.” And, although the Proclamation draws no such explicit connection, it is worth noting the overlap in Section 232 import tariff coverage and the scope of BIS’ recently-announced revision to export license review policy for “the Nvidia H200 and its equivalents” bound for export to the People’s Republic of China, which includes a requirement for “independent, third-party testing in the United States.” Last December, the President stated on social media that he would “allow Nvidia to ship its H200 products to approved customers in China” and that “25% will be paid to the United States of America.” If the recently introduced Section 232 tariffs are intended to implement that initiative in conjunction with the BIS export license revision, it would mark a novel use of Section 232 authority.
The Section 232 action is also notable for the broad exclusions applicable to otherwise-covered products that are used in any of the following capacities in the United States:
- data centers requiring over 100MW of new load dedicated to AI inference, training, simulation, or synthetic data generation;
- repairs or replacements;
- systematic research and development (as further defined in the HTSUS note) involving these chips;
- “emerging growth companies” (defined at 15 U.S.C. § 77b(a)(19));
- non-data center consumer electronics applications, including gaming, personal computing, professional visualization, workstation applications, and automotive applications;
- non-data center civil industrial applications, including factory robotics and industrial machinery; and
- public sector applications.
The list of use exclusions may be expanded if the Secretary of Commerce concludes that an additional use “contribute{s} to the strengthening of the United States technology supply chain or domestic manufacturing capacity for derivatives of semiconductors.”
Finally, the Proclamation further limits the application of tariffs to these products by providing that they are exempt from other existing Section 232 tariff regimes as well as the IEEPA-based “reciprocal” tariffs and “fentanyl” tariffs on products of Canada or Mexico (but not the People’s Republic of China). The basic effect is to revise the existing tariff “stacking” hierarchy to place these narrow semiconductor tariffs at the top.
The Proclamation states that the future imposition of “significant tariffs” on additional semiconductors, semiconductor manufacturing equipment, and derivative products may “depend{} on the status or resolution of such negotiations.” It is unclear whether a broader tariff regime implemented in the future would carry forward the broad use exemptions and relatively advantageous tariff stacking hierarchy applied to the narrow group of currently covered semiconductors.
Critical Minerals Investigation & Findings
Subsequent to BIS’ announcement of the Section 232 semiconductors investigation, BIS initiated a separate Section 232 investigation into imports of processed critical minerals and derivative products. Per yesterday’s Proclamation, the report in that investigation was issued well in advance of the 270-day report deadline, on October 24, 2025. Thus, yesterday’s Proclamation comes near the 90-day statutory deadline for the President to determine an initial course of action (if any) in response to BIS’ report.
Similar to the Section 232 semiconductors investigation, negotiations led by USTR and the Secretary of Commerce form the leading prong of the Section 232 processed critical minerals plan of action. Such negotiations are intended to address threats to US national security attributed to processed critical mineral imports. Meanwhile, imports of these articles will continue to be monitored on an ongoing basis. A status update on the negotiations is expected no later than July 13, 2026.
The Proclamation does, however, entertain the potential for future trade restrictions. Specifically, USTR and the Secretary of Commerce are instructed to “consider price floors for trade in critical minerals and other trade-restricting measures” in these negotiations, and USTR and the Secretary of Commerce are furthermore given broad authority to “employ all powers granted to the President under Section 232, as may be appropriate to implement and effectuate this proclamation.” Thus, while the Proclamation itself does not prescribe tariffs at this stage, it appears to contemplate future action.
Conclusion
The attorneys, licensed customs brokers, compliance professionals, economists, and trade specialists of Cassidy Levy Kent regularly assist companies in evaluating their supply chains to ensure compliant market access and adjust for tariff-related developments, including Section 232 tariffs, both mitigating burdens and taking advantage of opportunities. Businesses should be aware of the possible outcomes when planning or reviewing their supply chains.