The Trump administration is considering extending semiconductor tariffs beyond raw chips to include end products like laptops, consoles, and servers, potentially scrapping January data center exemptions.

The Trump administration is weighing a second round of semiconductor tariffs that would extend duties beyond chips to products built with them, including laptops, gaming consoles, and data center servers, eight unnamed sources familiar with the talks told POLITICO. Commerce Secretary Howard Lutnick favors a structure that would cap duty-free chip imports at a volume pegged to each company’s committed U.S. production. Commerce officials have indicated in private discussions that the exemptions attached to January’s 25% tariff—which currently cover data centers, research and development, startups, and consumer devices—may not carry over. A phase-in period is under discussion, and the framework could still change substantially in the coming weeks.

Proclamation 11002, signed on January 14, imposed a 25% duty on a narrow set of advanced accelerators, with Nvidia’s H200 and AMD’s MI325X named in the accompanying White House fact sheet, and explicitly labeled the action Phase 1. The same document directed Commerce to report to the president by July 1 on the market for semiconductors used in U.S. data centers. A separate April 14 report from the Office of the United States Trade Representative and Commerce covered tariff negotiations with Taiwan, South Korea, and Japan. The exemption categories now in question match those written into the January action and include U.S. data centers, research and development, startups, repairs, non-data-center consumer and industrial applications, and public sector uses.

Under Taiwan’s January trade agreement, zero tariffs apply to Taiwanese chips within 2.5 times a company’s current U.S. manufacturing capacity while new plants are under construction, tightening to 1.5 times once they are built. TSMC has committed $265 billion to its Arizona site, marking the largest foreign direct investment in U.S. history, yet projects only around 30% of its most advanced capacity there at full build-out, according to POLITICO. Taiwan produces more than 90% of the world’s leading-edge chips, and industry representatives argued in the talks that a quota keyed to current domestic capacity cannot cover the volumes hyperscalers are purchasing during a record AI spending run.

Jonathan McHale, digital policy chief at the Computer and Communications Industry Association, whose members include Amazon, Google, and Meta, compared the data center buildout to “building the transcontinental railroad” and warned that added cost and unpredictability put that investment at risk. Tech lobbyists have met with Lutnick and Bureau of Industry and Security undersecretary Jeffrey Kessler with growing frequency since the start of the summer, per the report, but three sources said recent talks moved against the industry. One person involved estimated the domestic manufacturing build-out at more than five years, exceeding any phase-in period the administration has allowed on previous tariff rounds.

These deliberations unfold amid broader geopolitical and technical pressures, including Taiwan’s consideration of a criminal ban on AI chip exports to all of China, ongoing U.S. adjustments to chip sanctions, and industry warnings that extreme memory consumption by AI data centers threatens other sectors. White House spokesperson Kush Desai defended the approach, saying reshoring chip manufacturing is a top priority for the president. The Commerce Department did not respond to POLITICO’s requests for comment.