The US-China chip war has entered a new, transactional phase. On January 15, 2026, the White House announced a 25% tariff on certain advanced semiconductors, including Nvidia’s H200 and AMD’s MI325X. Under the new “Section 232” order, these high-performance chips—previously blocked from export—can now be shipped to approved Chinese customers, but only if the U.S. Treasury receives a 25% share of the sale value.
How the “Transshipment” Tariff Works
Unlike traditional import duties designed to keep products out, this tariff is being used as a condition for allowing products in to China.
- The Detour: To comply, chips manufactured in Taiwan (by TSMC) must now be shipped to the United States first.
- The Inspection: While in the U.S., the chips undergo testing by a third-party lab to verify their performance specs and ensure they aren’t the restricted “Blackwell” or “Rubin” models.
- The Duty: Upon entering the U.S. for this “testing detour,” the 25% tariff is applied before the chips are re-exported to China.
Strategic Goal: Funding the U.S. Chip Build-out
President Trump defended the move as a way to capitalize on Chinese demand while bolstering domestic security. “China wants them, and other people want them, and we’re going to be making 25% of the sale of those chips,” Trump stated during the signing ceremony.
The revenue generated from these tariffs is reportedly earmarked for a “Tariff Offset Program” to incentivize the construction of more semiconductor fabs on American soil.
Key Exemptions and Restrictions
The White House was careful to ensure the tariffs don’t hurt domestic tech growth. The 25% duty does not apply to:
- U.S. Data Centers: American firms building infrastructure domestically are exempt.
- Startups & Public Sector: Civil and industrial applications within the U.S. will not face the surcharge.
- The “50% Rule”: In a blow to Chinese scaling, exporters must prove that they are shipping at least twice as many chips to U.S. customers as they are to Chinese ones.
| Feature | Details of the Jan 2026 Chip Order |
| Tariff Rate | 25% of Sales Value |
| Affected Models | Nvidia H200, AMD MI325X |
| Primary Route | Must pass through U.S. for testing/taxing |
| Export Cap | China orders cannot exceed 50% of U.S. volume |
| Restricted Tech | Nvidia Blackwell & AMD MI350 remain banned |
Market Reaction: China’s Silent Ban?
While Nvidia welcomed the “thoughtful balance” of the new rules, reports from Beijing suggest a cold reception. On January 14, just before the U.S. announcement, Chinese authorities reportedly instructed domestic firms to block imports of H200 chips, urging them to use Huawei’s Ascend processors instead.11
Analysts believe China is attempting to use its market size as leverage to negotiate the 25% “tax” downward.
Conclusion
The 25% tariff on Nvidia’s H200 represents a paradigm shift in trade policy: treating advanced technology as a taxable commodity rather than a purely restricted asset. By allowing the sale of “second-best” chips to China at a 25% premium, the U.S. is betting it can fund its own technological future using the revenue from its greatest rival’s AI ambitions.
