When the Chips Are Down, Tariffs Beat Subsidies

President Donald Trump this week said he is planning to impose a 100 percent tariff on imported computer chips unless manufacturers are also investing in U.S. production, telling reporters that “if you are building in America, there is no charge.”

The announcement came as two economists, Ran Zhuo of the University of Michigan and Audrey Tiew of New York University, released a new working paper that may help vindicate the administration’s confidence in its tariff-first strategy . Using a detailed structural model of the global contract semiconductor market, the authors find that a modest 10 percent import tariff can shift production decisions in favor of the United States, transforming a hypothetical U.S.-based chip fabrication facilit

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