Yearning for earnings? Check out Public.com, the investing platform for serious traders. You can build a multi-asset portfolio of stocks, bonds, options, crypto, and more. Access industry-leading yields like the 4.1% APY* so you can earn on your cash with no fees or minimums.
After weeks of deals—and plenty of failed negotiations—the Liberation Day sequel is here, and it’s just as chaotic as part 1.
“IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” President Trump wrote on Truth Social last night.
The truth is, it’s not even close to over. Levies as high as 50% are set to hit India and Brazil later this month, not to mention the ongoing question marks with major trading partners like China and Mexico, for which Trump has extended talks until August 12 and late October, respectively.
But even as reciprocal tariffs hit the global economy, Trump is already moving forward with rolling out sector-specific levies. The first industry in his crosshairs: semiconductors.
The chips are…up somehow?
Trump’s latest threat tariff proposal is a staggering 100% levy on semiconductor companies—unless they’re making their chips in the US, or have plans to do so.
It doesn’t take a market genius to surmise that a total tariff on semiconductors would hurt chip stocks, which have played a pivotal role in the broader market’s multi-year rally. But the AI hardware industry—along with the rest of the market—largely shrugged off the news.
Part of the reason that the market isn’t tanking is a phenomenon we’ve seen play out with increasing frequency: Investors just don’t believe Trump is serious. This notion, also known as the TACO trade (Trump Always Chickens Out), exists for good reason: Trump has used tariffs as a negotiating tactic, a punishment, and even just a tool of distraction, according to author and economist Kyla Scanlon. That’s why these days, even the pros see Trump’s pronouncements as just the first offer.
“Trump has demonstrated his escalate-to-de-escalate approach in negotiations, and we believe he has employed a similar strategy with the latest threats,” wrote UBS Global Head of Equities Ulrike Hoffmann-Burchardi of the proposed chip tariffs and the 250% pharma levies Trump floated. “So, our base case remains that the US effective tariff rate will settle at around 15%—enough to weigh on growth and lift inflation, but not enough to derail the US economy or the equity rally.”
We can see the dance already playing out with Apple’s announcement that it’s spending $100 billion to move manufacturing stateside, in addition to the $500 billion it had already promised. Shares rose 3.18% today after Tim Cook caved to Trump’s demands, while TSMC also jumped 4.86% after Taiwan said the chipmaker will be exempt from the latest tariffs, given it has plans to set up manufacturing in the US. Earlier this year, Nvidia, the biggest chipmaker of them all, announced it will spend $500 billion over the next four years to make its chips in the US.
On the flip side, Intel slumped 3.14% after Trump called for its CEO Lip-Bu Tan to be fired. Intel manufactures its chips in the US, but the chief executive’s purported ties to China have stoked Trump’s ire.
Right now, investors are confident that today’s latest tariff tirade isn’t much more than talk. But only time will tell if the market remains this resilient when it’s all happening for real.—LB