Trump’s Liberation Day: Bernstein Suggests 10% Baseline US Tariff on Raw Semiconductors Will Have Limited Impact, Yet Expect a ~40% Price Increase on PCs, Servers, and Smartphones

Trump’s Liberation Day: Bernstein Suggests 10% Baseline US Tariff on Raw Semiconductors Will Have Limited Impact, Yet Expect a ~40% Price Increase on PCs, Servers, and Smartphones

Please note, this content does not constitute investment advice. The author holds no stock positions in any companies mentioned herein.

Market Reactions Following President Trump’s ‘Liberation Day’

Following President Trump’s “Liberation Day, ”global markets are experiencing turbulence as the landscape of international trade undergoes significant reconfiguration. Amid this upheaval, raw semiconductors have surprisingly emerged as a stable sector, showing resilience in these unpredictable times.

Understanding the New Tariff Structure

President Trump has implemented a new 10 percent baseline tariff on all imports to the United States. Along with this, reciprocal tariffs have been introduced for several major trading partners.

Notably, some sectors, including steel, aluminum, and automotive components, remain exempt from these tariffs under Section 232. Therefore, vehicles and auto parts will continue to face a steep 25 percent duty.

Additionally, trading with Canada and Mexico, compliant goods under the USMCA will be exempt from tariffs, while non-compliant goods are subject to a 25 percent tariff and certain energy products face a 10 percent levy.

Controversy Surrounding Tariff Calculations

The introduction of these tariffs has sparked confusion and debate. Initial analyses suggest that the Trump administration’s approach to calculating effective tariffs appears flawed. By merely dividing the trade deficit with various nations by the exports to the U. S., the unique dynamics of service exports and comparative advantages were overlooked.

Financial Impact on American Households

An ING report estimates that the tariff measures will cost an average American household approximately $1, 350 annually, affecting lower-income families disproportionately.

Semiconductor Sector Analysis

Noteworthy analysis by Bernstein’s Stacy A. Rasgon highlights potential repercussions of the tariffs on raw semiconductors, personal computers, servers, and smartphones. Rasgon estimates a blended tariff rate around 25% could inflate import costs significantly, resulting in over $800 billion in increased expenses based on projected 2024 import levels.

The forecast reveals that the U. S.imported raw semiconductors worth $82 billion in 2024. Thus, a 10% increase in these costs may not create significant financial strain as semiconductor average selling prices have already surged 50% since the pandemic began.

Conversely, Rasgon anticipates a much steeper effective tariff of about 40% on PCs, servers, and smartphones, largely because semiconductors are often incorporated within these products. An approximate $120 billion tariff burden stems from around $200 billion in data processing device imports, showcasing the heavy reliance on imports from countries like Mexico, Taiwan, China, and Vietnam.

“As it turns out, most semiconductors enter the US inside other things (like PCs, servers, smartphones, etc.).”

Recent calculations from the Wall Street Journal highlight that the effective tariff on imports from China has now reached an astonishing 79%.Moreover, the elimination of the de minimis rule, which previously exempted sub-$800 imports from minimum tariffs, intensifies the burden faced by consumers and businesses alike.

Overall, the turbulent effects of Trump’s “Liberation Day”are expected to resonate particularly through disruptions in demand and supply chains, especially within the semiconductor market.

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