The tech industry is alarmed by reports that Donald Trump may soon impose sweeping semiconductor tariffs, warning the move could "doom" AI innovation in the US. Politico, citing eight anonymous sources familiar with the plans, said the tariffs could hit not just chips but also downstream products like gaming consoles and data center servers.

Trade groups, including the Computer and Communications Industry Association (CCIA), argue the tariffs would be economically ruinous. The CCIA estimated a $90 billion annual GDP loss and delays or cancellations of 20 percent of data center projects through 2030. They also warned the policy could push data center development overseas, undermining Trump's goal of boosting domestic production.

In a May letter to Treasury Secretary Howard Lutnick, the CCIA and about 20 other groups said tariffs would raise prices on everyday tech items like smartphones, laptops, and vehicles, straining household budgets. They also cautioned that limiting consumer access to AI-powered devices would slow AI adoption and innovation in the US.

The administration is reportedly considering tariff relief tied to foreign firms investing in US chip manufacturing, such as Taiwan Semiconductor Manufacturing Co. However, industry leaders remain skeptical, noting that the global chip shortage is already driving prices up, with semiconductor revenue projected to reach $1.6 trillion by 2026. Any additional tariffs, they argue, would only worsen the situation.