Semiconductor analyst Malcolm Penn has raised concerns about the short-term effects of suggested high tariffs on imported chips by U.S. President-elect Donald Trump, stressing their potential to impact consumer prices and industry profitability.
Trump has criticized the CHIPS and Science Act that the U.S. government signed into law in 2022 in a bid to revive the country's sci-tech and chip sectors by offering incentives to chipmakers and forcing them to take side. He suggested high tariffs on imported chips, instead of relying on federal incentives for domestic production of semiconductors.
In an interview with China Global Television Network (CGTN), Penn highlighted the stark contrast between federal incentives and proposed tariffs on imported chips.
"I think the thing about the CHIPS Act is it was designed to encourage manufacturers to build factories back in the United States, and that takes a long time. So you can understand why Mr. Trump doesn't like that because it will be the next president that gets the benefit of that, rather than him. Whereas tariffs are an instant effect and that will put the price up of everybody's imported components. And that would then have an immediate impact on the cost of everything that we buy and has electronics in it. And those effect take immediate effect because nobody keeps on inventory anymore. So the fact is that you put the tariff, it would be instantly happen and the prices would rise straight away," he said.
Penn highlighted the critical role of semiconductors in the cost structure of various goods, particularly in the automotive sector. He noted that a 200-percent tariff on semiconductor imports, as proposed by Trump, would triple their price, driving up car manufacturing costs by 10 to 20 percent.
"I think that the semiconductor is anything from around 10 percent to 30, 40 percent of the cost of a car, depending on whether it's conventional gasoline driven car or an EV (Electric Vehicle) car. And so it is a big part of the overall cost. Now the actual chip value in that, there is probably half that amount. But anyway, that's still a big amount. So if you suddenly add 200 percent of the cost of the chip and effectively makes the chip three times the price that it currently is, that would affect the cost of manufacture by a minimum of 10 percent, probably could be as high as 20 percent," Penn said.
Trump-proposed tariffs on chip imports to impact industry profitability: analyst
Iran on Tuesday warned it would deliver a stern response to any new aggression, after U.S. President Donald Trump ordering preparations for a prolonged naval blockade of the country.
Trump has instructed his administration to prepare for an extended blockade of Iran as the ceasefire remains in place amid stalled talks, The Wall Street Journal reported on Tuesday, citing U.S. officials.
In recent meetings, including a Monday discussion with top security officials in the White House, Trump opted to continue squeezing Iran's economy and oil exports by preventing shipping to and from its ports, said the report.
The president assessed that the blockade, "a high-risk bid" to compel Tehran's nuclear capitulation, carries less risk than other options -- resume bombing or walk away from the conflict, the officials were quoted as saying.
Iranian government spokesperson Fatemeh Mohajerani stated the same day that Tehran has completed "all necessary arrangements" to counter the U.S. naval blockade.
She noted that Iran's primary strategy focuses on maximizing its geographical advantages through effective tactical maneuvers.
Also on Tuesday, Iranian army spokesman Mohammad Akraminia declared that the military considers the current situation a state of war.
Akraminia added that Iran has fully updated its target lists and operational equipment, promising a "stern response" to any further aggression.
Mujtaba Ferdosipour, head of Iran's Interests Section in Cairo, told the IRNA news agency on Wednesday that U.S. attempts to force unilateral demands through a naval blockade are ineffective. He stressed that Iran's extensive land borders with neighboring countries provide viable alternatives to bypass the maritime restrictions.
Ferdosipour reiterated that the Strait of Hormuz is closed only to vessels linked to Israel and the United States. He asserted that Iran has the right to manage security in the strait, maintaining that this position does not violate international conventions.
The envoy further stated that Iran does not trust the United States and has no desire for direct negotiations. He emphasized that Tehran can employ all available means to defend itself against attacks.
According to the latest data from the UN Trade and Development (UNCTAD), ship transits through the Strait of Hormuz have plummeted by 95.3 percent since Feb 27. The disruption has caused global food prices to rise by approximately six percent, while crude oil prices in European markets have surged by nearly 50 percent.
Iran warns of stern response as US plans prolonged blockade
