Coalition Letter on Section 232 : Semiconductors and Semiconductor Manufacturing Equipment

By SBE Council at 21 May, 2026, 6:20 pm

Hon. Howard W. Lutnick
Secretary of Commerce
U.S. Department of Commerce
1401 Constitution Avenue NW
Washington, DC 20230

Amb. Jamieson Greer
United States Trade Representative
Office of the U.S. Trade Representative
600 17th St. NW
Washington DC, 20508

RE: Section 232 Investigation of Imports of Semiconductors and
Semiconductor Manufacturing Equipment (91 FR 2443)

Dear Secretary Lutnick and Ambassador Greer:

The undersigned associations support efforts to strengthen U.S. semiconductor
manufacturing capacity. Semiconductors underpin U.S. innovation, economic growth,
and national security. Policies that reinforce a resilient, competitive, and globally
integrated domestic ecosystem are essential to maintaining U.S. leadership. However,
tariffs on semiconductors and semiconductor-containing products will risk undermining
rather than advancing this shared objective. We respectfully request that the
Administration refrain from imposing tariffs on semiconductors and downstream
consumer and commercial technology products.

The President’s January 14, 2026, Proclamation, “Adjusting Imports of Semiconductors,
Semiconductor Manufacturing Equipment, and Their Derivative Products into the United
States” (“Proclamation”) directs the Administration to conduct negotiations aimed at
addressing the identified national security risks associated with imports of these
products. It further states that, depending on the outcome of these negotiations, the
President “may consider imposing significant tariffs” on these products. While this letter
focuses primarily on the anticipated impact of semiconductor tariffs on consumer
technology products, we note that these same concerns apply with equal force across
many sectors critical to U.S. technology leadership. We urge the Administration to
engage closely with all affected stakeholders. We outline below our concerns about the
potential application of tariffs to semiconductors and downstream products across the
electronics supply chain.

I. Effects of Tariffs on Technology Products

Smartphones, laptops, tablets, smartwatches, connected devices, vehicles, and servers
are everyday tools that families and businesses across the country depend on to work,
learn, communicate, and access healthcare. Because semiconductors are embedded in
nearly all modern technology products, tariffs on downstream products, including used
and previously-owned goods, would raise costs for consumers and U.S. businesses,
adding to inflationary pressures already straining households and supply chains.
Tariffs would be especially disruptive at a time when both the supply and price of
semiconductors available to the U.S. economy are experiencing historical constraints.
Memory chip shortages and the related surge in memory prices have already resulted in
widely reported increases in the price of consumer products, as well as delays or
deferrals in new product launches. Tariffs on semiconductors and derivative products
would worsen market conditions, limiting technology choice for American consumers
and businesses. They would also slow the deployment of next-generation digital
infrastructure and undermine U.S. leadership in artificial intelligence and other strategic
technologies.

Broad semiconductor tariffs would also function as a tax on American companies of all
sizes that are building the next generation of American consumer technology. The
consumer technology ecosystem includes both well-known global brands and
thousands of small and mid-sized firms that design, build, and sell innovative products,
from IoT devices and smart home technology to health monitoring tools and educational
platforms. These companies operate on thin margins and depend on affordable access
to semiconductors and components. Small and mid-sized firms do not have the scale or
cushion required to absorb or negotiate around tariff costs. These effects would
reverberate upstream by dampening demand for software, services, semiconductors,
and complementary investments that depend on a healthy downstream technology
market.

Consumer devices are the primary interface through which Americans access AI
powered tools. AI only delivers on its promise when people can actually use it – and
tariffs that price consumers out of the device market would slow AI adoption at the very
moment the United States is positioned to lead. Making devices less accessible to
students, educators, and businesses would undermine this Administration’s AI
education, workforce and adoption objectives while competitors race ahead.

II. Effects of Tariffs on the U.S. Manufacturing and AI Ecosystem

Broad tariffs on downstream products and semiconductors would raise input costs
across the U.S. manufacturing and AI ecosystem, limiting U.S. investment, constraining
R&D, and weakening U.S. competitiveness. Tariffs on semiconductors and derivative
products relevant to data centers and communications infrastructure, such as servers
and server racks, would increase the cost of building the digital infrastructure needed in
the United States to scale AI globally and handle the growing demands of AI enabled
services. A higher-cost technology environment during the U.S. AI buildout would
threaten the success of the Administration’s AI Action Plan. Higher prices for devices
would limit access for consumers to AI tools, slowing AI adoption by Americans.
Together, these effects would harm U.S. technology leadership and AI dominance.
They would also increase the cost of scaling cloud capacity, enterprise modernization,
and secure digital services that businesses and public-sector entities rely on every day.

Investment in U.S. chipmaking capacity is at a historic high. U.S. fabs are
oversubscribed, and the U.S. maintains a position of dominance in many, if not most of
the segments of the semiconductor ecosystem. Imposing tariffs on chip-consuming
industries only risks broad economic harm to these vital industries, while offering limited
national security or domestic manufacturing benefits. Policy measures that expand
domestic capacity, accelerate permitting and infrastructure deployment, support
advanced packaging and workforce development, and strengthen trusted supply chains
would better advance U.S. resilience without imposing economy-wide costs on
downstream innovation.

III. Administrative Burden

Layering new Section 232 tariffs on downstream semiconductor-containing products
would add complexity, strain compliance capacity, and be difficult to administer –
particularly for startups and small businesses. Finished-product importers and customs
brokers classify goods based on the imported article, not each embedded
semiconductor. For many downstream technology products, importers do not have
entry-ready access to chip-level bills of material, semiconductor origin, component
value, wafer fabrication location, assembly/test location, or substitution history.
Companies often hold that information several tiers upstream. It may change during
production and may be proprietary.

A tariff framework that depends on this data would create significant operational
uncertainty across the import process, including supplier certifications, valuation,
country-of-origin analysis, and post-entry corrections. Any downstream tariff framework
should therefore be limited to clear, HTS-defined product coverage and be
administrable using information importers reasonably possess at the time of entry to
provide certainty for long-term procurement, product planning, and infrastructure
investment decisions, particularly where hardware lifecycles and capital commitments
are measured in years.

IV. Recommendations

As the Administration considers next steps, we recommend that it:

• Avoid tariffs on semiconductors and their derivative products, particularly
downstream goods used by consumers, businesses, and public-sector entities;
• Ensure that the electronics exclusions established in the April 11, 2025,
Presidential Memorandum are carried forward into the Section 232 framework;
and
• Develop a plurilateral framework with trusted trading partners to strengthen
semiconductor supply chain resilience and reduce trade barriers among allied
economies.

If the Administration ultimately decides to impose tariffs as a result of this investigation,
it should apply them in a nuanced and targeted way. In specific, it should:

• Refrain from applying tariffs to full HTS categories that capture products with
minimal semiconductor content or products whose semiconductor inputs are
incidental to their principal use;
• Establish a de minimis threshold (e.g., by weight or value) to exclude products
with minimal semiconductor content and provide clear guidance that can be
operationalized across complex supply chains;
• Ensure that any tariffs imposed pursuant to this Section 232 investigation are
subject to the non-stacking provisions set forth in Executive Order 14289, such
that semiconductor and derivative products are not subject to multiple
overlapping tariff measures;
• Consider targeted relief mechanisms, including duty drawback or comparable
offsets, for downstream products incorporating semiconductors – particularly
where such products support exports, domestic infrastructure deployment, or
strategic technology adoption;
• Account for the large compliance and administrative burdens associated with
downstream tariffs, including for secondhand products;
• Ensure any tariff offset program is transparent, technology-neutral, and accounts
for the contributions of companies making significant investments in the U.S.
semiconductor and downstream innovation ecosystem, including large U.S. off
takers and those that make significant investments in the U.S. using derivative
products; and
• Account for the broader technological ecosystem and the increased costs
consumer electronics are already experiencing due to the surge in memory
prices and related shortages; and
• Evaluate the broader economic and supply chain effects, including impacts on
consumer purchasing power, inflation and affordability, product availability, and
the impacts on U.S. business competitiveness and innovation leadership,
including in AI, 6G, quantum computing, and other technology priorities.

Thank you for your consideration. We look forward to continued engagement to ensure
the United States remains at the forefront of semiconductor innovation and
manufacturing while preserving the ability of downstream technology industries to
invest, build, and compete globally.

Sincerely,
Association for Competitive Technology (ACT)
Alliance for Automotive Innovation
Autos Drive America
CEDIA
Consumer Technology Association
Computer & Communications Industry Association
Coalition of Services Industries
Entertainment Software Association
MEMA. The Vehicle Suppliers Association
National Association of Music Merchants
National Electrical Manufacturers Association
National Foreign Trade Council
National Retail Federation
Printing United Alliance
Retail Industry Leaders Association
Small Business & Entrepreneurship Council
Software Information Industry Association
Technology Trade Regulation Alliance
World Innovation Technology & Services Alliance

CC:
Secretary of the Treasury Scott Bessent
Director of the National Economic Council Kevin Hasset