NVIDIA's AI Servers Currently Avoid U.S. Tariffs on Taiwan, But Section 232 Threatens Massive Chip Tariffs of Up to 50%

As U.S.-Taiwan trade tensions simmer amid ongoing global tech rivalries, NVIDIA and other AI giants are, for now, exempt from the latest wave of U.S. tariffs targeting Taiwanese exports. However, looming tariff threats under Section 232 could disrupt the AI hardware supply chain dramatically, especially for companies heavily dependent on Taiwan’s manufacturing power.

According to CNYES, the 20% U.S. tariffs recently imposed on Taiwanese exports currently exclude critical sectors such as semiconductors, AI servers, and consumer electronics meaning NVIDIA, AMD, and their manufacturing partners like TSMC, Foxconn, Quanta, and Wistron have avoided the blow, at least temporarily. Currently, only about 25% of Taiwan’s exports to the U.S. are impacted, sparing the core technologies that fuel the ongoing AI boom.

However, the calm may be short-lived. Under Section 232 of the Trade Expansion Act, the U.S. is reviewing the possibility of imposing “national security-based” import restrictions on semiconductors and AI hardware. This section, previously used to levy tariffs on steel and aluminum, now presents a real threat to the global semiconductor industry especially if chips and AI servers are formally deemed a risk to national security.

Such a designation could lead to tariffs as high as 50% on AI hardware from Taiwan a scenario that would severely impact NVIDIA’s bottom line and disrupt the entire AI server supply chain. While Taiwan remains a crucial production hub, ongoing pressure from Washington might demand increased investment or concessions in order to maintain tariff exemptions. With TSMC’s $165 billion investment in chip production and future plans to ramp up 2nm wafer output to 60,000 units in 2026, Taiwan is already signaling a willingness to deepen its partnership with the U.S. tech ecosystem.

There are even rumors of Intel becoming involved in the trade negotiations, further illustrating how the U.S. may seek to leverage domestic partnerships to secure broader access to Taiwan’s semiconductor IP. This strategy could insulate U.S. national security interests, while giving Washington greater control over next-gen computing technologies.

Whether Section 232 chip tariffs materialize remains to be seen. But if enacted, they could lead to sharp cost increases across the AI sector, impacting not only NVIDIA’s profit margins but also downstream pricing for enterprise and consumer AI hardware. Until a formal trade deal is reached, the global tech industry must prepare for the possibility of a major reshuffling of AI supply chain dynamics.

Do you think U.S. chip tariffs under Section 232 would strengthen national security or weaken innovation through higher costs? Let us know your thoughts in the comments.