The U.S. will increase tariffs on Chinese semiconductor imports in June 2027, at a rate to be determined at least a month in advance, the Trump administration said in a Federal Register filing on Tuesday.

But in the meantime, the initial tariff rate on semiconductor imports from China will be zero for 18 months, according to the filing from the Office of the U.S. Trade Representative.

As part of an investigation that kicked off a year ago, the agency found that China is engaging in unfair trade practices in the industry.

“For decades, China has targeted the semiconductor industry for dominance and has employed increasingly aggressive and sweeping non-market policies and practices in pursuing dominance of the sector,” the office said in the filing.

The decision to delay new tariffs for at least 18 months signals that the Trump administration is seeking to cool any trade hostilities between the U.S. and China.

Additional tariffs could also become a bargaining chip if future talks break down.

U.S. President Donald Trump and Chinese President Xi Jinping reached a truce in the so-called trade war in October, as part of a deal that included the U.S. slashing some tariffs and China allowing exports of rare earth metals.

The USTR’s Tuesday filing states that tariffs will increase on June 23, 2027.

The notice is the next step in a process focusing on older chips that started during the Biden administration under Section 301 of the Trade Act.

The new 2027 date gives clarity to American firms that have said they are closely watching how U.S. tariffs could affect their businesses or supply chains.

The tariffs are separate from other duties threatened by the Trump administration on Chinese chip imports under Section 232 of the law.

Former Facebook Chief Privacy Officer Chris Kelly said Tuesday that the next phase of the artificial intelligence boom will focus on becoming more efficient.

As major AI players race to churn out the infrastructure needed to support AI workloads, Kelly told CNBC’s “Squawk Box” that the industry will need to streamline these power-intensive buildouts.

“We run our brains on 20 watts. We don’t need gigawatt power centers to reason,” Kelly said. “I think that finding efficiency is going to be one of the key things that the big AI players look to.”

Kelly, who was also general counsel at Facebook, added that the companies able to reach a breakthrough in lowering data center costs will emerge as AI winners.

The data center market has accumulated over $61 billion in infrastructure dealmaking in 2025 as hyperscalers have rushed into a global construction craze, according to S&P Global.

OpenAI alone has made over $1.4 trillion in AI commitments over the next several years, including massive partnerships with GPU leader Nvidia and infrastructure giants Oracle and Coreweave.

But the data center frenzy has garnered growing concerns about where the power to support these buildouts is coming from, with an already strained electric grid.

Nvidia and OpenAI announced in September a project that included at least 10 gigawatts of data centers, which is roughly the equivalent of the annual power consumption of 8 million U.S. households.

Ten gigawatts is also around the same amount of power as New York City’s peak summer demand in 2024, according to the New York Independent System Operator.

Cost concerns were further fueled after DeepSeek launched a free, open-source large language model in December 2024 for under $6 million, the company claimed, significantly lower than U.S. competitors.

Kelly said he expects to see “a number of Chinese players come to the fore,” especially following President Donald Trump’s recent decision to approve the sale of Nvidia’s H200 chips to the country.

Open-source models, especially out of China, will provide people access to “basic levels of compute” and generative and agentic AI, Kelly added.