Black Monday Hits AI as Tariffs Take Over the Tech Industry

“The United States of America is the leader in AI, and our administration plans to keep it that way,” said Vice President J.D. Vance at the Artificial Intelligence Action Summit in Paris. The message was meant to project confidence about America’s position in global technology. But just weeks later, the administration’s own trade policy has put that leadership under pressure.

With Donald Trump back in the White House, tariffs are once again at the center of U.S. economic strategy. This time, they’re aimed not just at China, but at the core of the AI industry itself. The White House says the goal is to bring more tech manufacturing back to the U.S. But the reality is more complicated because building and running advanced AI still depends heavily on hardware made overseas, especially chips.

The new tariffs, announced under the banner of “American Chips for American AI,” slap a 60% duty on semiconductor imports from China, South Korea, Taiwan, and the Netherlands. But the ripple effects extend well beyond manufacturers. The biggest impact is landing on U.S.-based AI companies and cloud infrastructure providers who depend on foreign-made chips to run massive data centers powering models like OpenAI’s GPT-4 and Meta’s Llama.

One industry insider called the policy “Project Stargate’s biggest bottleneck,” referencing Microsoft’s sprawling AI data center initiative. Despite Microsoft's $100 billion commitment to Stargate, an effort to meet OpenAI’s escalating compute needs, the physical chips at the heart of it remain overwhelmingly foreign-made. Nvidia’s H100 and the forthcoming Blackwell chips, critical for training large language models, are designed in the U.S. but manufactured in Taiwan by TSMC.