Advanced technology is re-shaping our lives at a quickening pace. The entire world now relies upon technology that was pioneered in America. But while American ingenuity has driven the world’s productivity for well over a century, our future leadership is far from guaranteed.
Artificial Intelligence, aka “AI,” now represents the future of global technology. Will America prove to be the preeminent leader of this advance? Absent aggressive and comprehensive policies to boost domestic production of the semiconductor chips that underpin AI, the answer to that question will be a heart-crushing “No.”
Currently, Taiwan leads the world in market share of semiconductor chips. The competition – including the United States – is not close. We had a brief glimpse of the problems associated with a lapse in chip production during the pandemic, which resulted in significant manufacturing shortfalls for durable goods such as appliances, electronic devices, and automobiles.
The message from that episode was clear: America must produce more chips domestically and end its dependence on the global marketplace. Now, we face a similar challenge from AI. Problematically, the supply chain for chips arises from parts of the world that are especially susceptible to geopolitical risks, among other concerns. Just as America learned the hard way in the 1970s with the supply of oil, when countries halfway across the globe control a commodity essential to our economy, we risk the nation grinding to a halt.
Fortunately, President Trump gets this. His focus on trade policy isn’t just getting our trading partners to pay a fairer share of duties, but has the long-term goal to gain American self-sufficiency in the economic sectors that will determine our future prosperity.
America has to lead the world in AI. That is neither an option nor a luxury, but a necessity. To guarantee that leadership, we must reshore semiconductor chip manufacturing and create demand for U.S.-made chips. In addition to ensuring leadership in AI, domestic semiconductor production will create jobs, bolster our national security, and establish long-term prosperity.
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President Trump has taken the lead by indicating a 100% tariff on imported chips, a very positive development. The details of this policy, however, must also guarantee that any exemptions and workarounds are not exploited. At a September 4 dinner with the President, the CEOs of America’s top technology firms pledged $1.75 trillion in domestic investments in AI and related technologies.
Those commitments cannot be hollow. Our policies and trade agreements must demand follow-through from these firms. A commitment to buy chips produced domestically must be fulfilled.
Tech firms that purchase semiconductors should be encouraged to source those chips in the United States. But as chip production expands in the United States, exemptions allowing credits must be “Chip-for-Chip,” limiting foreign chip imports in proportion to and aligned with verifiable commitments to build in the United States. Such exemptions should be temporary, permitting a “Chip-for-Chip” import credit only while domestic expansion projects are underway, and only until those projects are completed.
Such a policy can be enforced by implementing a specific penalty for non-compliance: the failure to fulfill investment pledges should result in tariffs being paid by offending firms retroactively.
The major investment pledges made by companies, obtained by President Trump’s aggressive efforts to invigorate America’s economy by focusing on domestic production, must be more than promises. They must be fulfilled. Companies seeking an exemption to continue the use of foreign-sourced chips should be required to meet a “Chip-for-Chip” standard. Absent that, meaningful change will be elusive, ensuring America’s status as an also-ran in the race to supply the world with the dominant technology of the 21st Century.
President Trump has grabbed the brass ring to ensure America will be the world leader in AI. Critical initiatives led by former presidents likewise yielded historic legacies, for example, Eisenhower’s creation of a national highway system and JFK's putting America on the moon. By instituting a firm and clear trade policy that creates demand for US semiconductor chips manufactured here at home, President Trump will occupy a lofty perch as the leader who secured America’s position as the winner in the race to global AI dominance.
Gerard Scimeca is an attorney and chairman of CASE, Consumer Action for a Strong Economy, a free-market-oriented consumer non-profit he co-founded.
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