President-elect Donald Trump made raising tariffs on imported goods a tenet of his reelection campaign. And while that could raise prices on everything from jeans to children’s toys for everyday Americans, Trump has also floated the idea of another tariff that could impact Wall Street’s current favorite trade: AI.

During an appearance on Joe Rogan’s podcast ahead of the election, Trump lambasted the idea of the CHIPS Act, a bipartisan piece of legislation Biden signed in 2022 designed to bring semiconductor manufacturing back to the US. He called it “so bad.”

Instead of using legislation and billions in subsidies to bring chip-building facilities to the US, Trump said tariffs would have the same effect. In Trump’s estimation, putting tariffs on semiconductors from Taiwan would force chip builders, like TSMC, to construct chip manufacturing plants, or fabs, in the US to avoid having to pay the added tax.

But there’s no guarantee chip builders wouldn’t simply move the added cost down the line to their customers and forego spending cash on expensive US facilities.

Such a move could also end up cutting into profit margins for companies like Nvidia (NVDA) and AMD (AMD), which rely on chips built in Taiwan, unless they similarly pass those costs down to their own customers. And that could have ripple effects across the tech industry.

“If the argument is that this is the way to force it to move here, TSMC is already moving here,” explained William Reinsch, a senior adviser with the Center for Strategic and International Studies. “They're already building a fab plant in Arizona. That's all already underway and the tariffs aren't going to make that move any faster. If anything, they might complicate the effort.”

Chip tariffs are on the table, but not a certainty

Trump has continuously pushed the idea of tariffs as a means of targeting the US trade deficit and bringing manufacturing jobs back to America. He’s already said he wants to see a 10% to 20% tax on all imported products and a 60% tax on Chinese goods.

During his interview with Rogan, Trump said that instead of moving forward with the CHIPS Act, he would have put tariffs on chips coming out of Taiwan, though he didn’t say how much.

The US has made reshoring chip manufacturing a major national security objective after the pandemic exposed the fragility of the global chip supply chain—and America’s reliance on other countries for advanced semiconductors.

According to a 2023 US International Trade Commission working paper, 44% of US imports of logic chips — central processing units (CPUs), graphics processing units (GPUs), etc. — came from Taiwan as of 2021. In the event of a “major manufacturing disruption,” the working paper estimated that the price of logic chips would jump as much as 59%, and US capacity would only be able to fill a portion of the gap left by the lack of Taiwanese imports.