Semiconductors scored a rare exemption from US President Donald Trump’s aggressive reciprocal tariffs, but the relief is symbolic at best. Most semiconductors enter the US embedded in servers, GPUs, laptops, and smartphones.
The finished goods remain heavily tariffed, some with duties reaching up to 49%. The exemption looks good politically but delivers little practical benefit. Nvidia’s DGX systems, crucial for training advanced AI models, do not fall under the exempted HTS codes. Nvidia could pay effective tariffs nearing 40% on these vital components. Such costs threaten to stall critical AI infrastructure projects across the country.
Semiconductor tariffs may compromise the goal of the CHIPS Act. The act promised tens of billions of dollars in subsidies to support domestic chip manufacturing. Yet advanced lithography machines — key equipment from countries like the Netherlands and Japan — face 20%–24% tariffs. Ironically, tariffs designed to boost American production increase the cost of essential manufacturing equipment.
The effect of new tariffs is already slowing progress in critical supply chains — just as generative AI and large language models are gaining momentum across sectors like finance and defense. Any delays or cost increases now could blunt America’s technological advantage.
Indirect costs undermine exemptions for AI
Modern semiconductor supply chains are global and highly integrated. An exemption on raw silicon means nothing when servers, GPUs and other finished products face steep tariffs. Tariffs indirectly inflate costs, eliminating any competitive advantage from domestic manufacturing.
Indirect tariff costs hit high-end systems disproportionately hard. The effect ripples through AI model training, data center expansions and major infrastructure projects, significantly slowing the industry’s momentum.
Tariff impasse halts investment
So far, it’s clear that the US president’s tariff plan didn’t follow any conventional economic trends or calculated strategy. The uncertain tariff situation stalls investment decisions across the technology sector. Companies need predictable costs to justify large capital expenditures. Ongoing tariff volatility prevents them from committing resources to new data centers and manufacturing lines.
This mirrors the supply chain chaos of 2020. At that time, uncertainty caused massive order cancellations and slowed industry recovery for years. If tariff ambiguity continues, we could see similar waves of cancellations in 2025. This would further compound existing inventory and revenue issues in the semiconductor sector.
Domestic production is not optimal
The border argument for these tariffs is that they’re meant to boost domestic production. They do little, however, to encourage genuine domestic semiconductor production. Despite subsidies under the CHIPS Act, most US semiconductor companies still rely on international foundries for manufacturing. Instead, they face increased equipment and operational costs.
The idea that tariffs promote domestic production ignores the reality of global semiconductor manufacturing. Costs rise across the board, putting American companies at a disadvantage rather than offering protection.
AI projects face heightened risk
The blockchain and crypto sectors, particularly AI-driven projects, also feel the pinch. Projects depend heavily on GPUs and high-performance servers for mining, validating transactions and running decentralized AI computations. Increased hardware costs directly affect profitability and growth, potentially stalling innovation in blockchain applications.
AI developments have just started to pick up the pace in the blockchain and Web3 space. The industry saw increased interest from investors and VCs just a year ago. So, they are still on tighter budgets. Elevated costs can, however, lead to stagnation. We might see innovators and developers exiting the market. The ripple effect extends beyond the general technology sector and could threaten future digital economies.
Moreover, these cost pressures disproportionately affect startups and smaller tech firms. Industry giants can absorb additional expenses, but innovative, smaller players face existential threats. This dynamic risks stifling innovation at the grassroots level, harming the entire tech ecosystem.
What to expect
Semiconductors have momentarily escaped direct tariffs, but the exemption provides little benefit. Tariffs continue to hit finished products, driving up indirect costs across the industry. Instead of boosting domestic manufacturing, these tariffs create economic paralysis, stall critical infrastructure projects, and threaten America’s lead in AI innovation. Policymakers must acknowledge these realities and adjust their approach before irreversible damage is done to the nation’s technological future.
Opinion by: Ahmad Shadid of O.xyz.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
“The target was never particularly ambitious,” says the Institute for Fiscal Studies (IFS) about Labour’s plan to add two million extra NHS appointments during their first year in power.
In February, Health Secretary Wes Streeting announced they had achieved the feat early. He recently described the now 3.6m additional appointments achieved in their first eight months as a “massive increase”.
But new data, obtained by independent fact checking charity Full Fact and shared exclusively with Sky News, reveals this figure actually signalled a slowing down in new NHS activity.
There was an even larger rise of 4.2m extra appointments over the same period the year before, under Rishi Sunak’s government.
The data also reveals how unambitious the target was in the first place.
We now know two million extra appointments over the course of a year represents a rise of less than 3% of the almost 70 million carried out in the year to June 2024.
In the last year under Mr Sunak, the rise was 10% – and the year before that it was 8%.
Responding to the findings, Sarah Scobie, deputy director of independent health and social care think tank the Nuffield Trust, told Sky News the two million target was “very modest”.
She said delivering that number of appointments “won’t come close to bringing the treatment waiting list back to pre-pandemic levels, or to meeting longer-term NHS targets”.
The IFS said it was smaller than the annual growth in demand pressures forecast by the government.
What exactly did Labour promise?
The Labour election manifesto said: “As a first step, in England we will deliver an extra two million NHS operations, scans, and appointments every year; that is 40,000 more appointments every week.”
We asked the government many times exactly how it would measure the pledge, as did policy experts from places like the IFS and Full Fact. But it repeatedly failed to explain how it was defined.
Leo Benedictus, a journalist and fact-checker at Full Fact, told Sky News: “We didn’t know how they were defining these appointments.
“When they said that there would be more of them, we didn’t know what there would be more of.”
Image: Leo Benedictus
Even once in government, initially Labour did not specify their definition of “operations, scans, and appointments”, or what the baseline “extra” was being measured against.
This prevented us and others from measuring progress every month when NHS stats were published. Did it include, for instance, mental health and A&E appointments? And when is the two million extra comparison dating from?
Target met, promise kept?
Suddenly, in February, the government announced the target had already been met – and ever since, progress on appointments has been a key boast of ministers and Labour MPs.
At this point, they did release some information: the definition of procedures that allowed them to claim what had been achieved. They said the target involved is elective – non-emergency – operations excluding maternity and mental health services; outpatient appointments and diagnostic tests.
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Why has Starmer axed NHS England?
However, we still did not have a comprehensive baseline to measure the two million increase against.
The government data instead relied on a snapshot: comparing the number of appointments carried out from July to November 2024 with the number from July to November 2023, and adjusted them for the number of working days in each period.
This did not tell us if the NHS had already been adding appointments under the Conservatives, and at what pace, and therefore whether this target was a big impressive ramping up of activity or, as it turns out, actually a slowing down.
Since then, a number of organisations, like Full Fact, have been fighting with the government to release the data.
Mr Benedictus said: “We asked them for that information. They didn’t publish it. We didn’t have it.
“The only way we could get hold of it was by submitting an FOI request, which they had to answer. And when that came back about a month later, it was fascinating.”
This finally gives us the comparative data allowing us to see what the baseline is against which the government’s “success” is being measured.
A Department of Health and Social Care spokesperson said: “On entering office last July, the secretary of state [Wes Streeting] was advised that the fiscal black hole meant elective appointments would have to be cut by 20,000 every week.
“Instead, this government provided the extra investment and has already delivered 3.6 million additional appointments – more than the manifesto commitment the British public voted for – while also getting more patients seen within 18 weeks.
“In the nine months since this government took office, the waiting list has dropped by over 200,000 – more than five times as much as it had over the same period the previous year – and also fell for six consecutive months in a row.”
Image: Health Secretary Wes Streeting. Pic: PA
We put this to Jeremy Hunt, Rishi Sunak’s chancellor during his last two years as prime minister, and health secretary for six years under David Cameron and Theresa May.
He said: “What these numbers seem to show is that the rate of appointments was going up by more in the last government than it is by this government. That’s really disappointing when you look at the crisis in the NHS.
“All the evidence is that if you want to increase the number of people being treated, you need more capacity in the system, and you need the doctors and nurses that are there to be working more productively.
“Instead what we’ve had from this government is the vast majority of the extra funding for the NHS has gone into pay rises, without asking for productivity in return.”
Image: Jeremy Hunt speaks to Sky’s Sam Coates
Edward Argar, shadow health secretary, accused the government of a “weak attempt […] to claim credit for something that was already happening”.
“We need to see real and meaningful reform that will genuinely move the dial for patients,” he added.
Is the NHS getting better or worse?
New polling carried out by YouGov on behalf of Sky News this week also reveals 39% of people think the NHS has got worse over the past year, compared with 12% who think it’s got better.
Six in 10 people say they do not trust Keir Starmer personally on the issue of the NHS, compared with three in 10 who say they do.
That is a better rating than some of his rivals, however. Just 21% of people say they trust Nigel Farage with the NHS, and only 16% trust Kemi Badenoch – compared with 64% and 60% who do not.
Ed Davey performs better, with 30% saying they trust him and 38% saying they do not.
Ms Scobie of the Nuffield Trust told Sky News “the government is right to make reducing long hospital treatment waits a key priority […] but much faster growth in activity is needed for the NHS to see a substantial improvement in waiting times for patients.”
The government is correct, however, to point out the waiting list having dropped by more than 200,000 since it’s been in office. This is the biggest decline between one July and the following February since current waiting list statistics were first published under Gordon Brown.
The percentage of people waiting less than 18 weeks for treatment is also falling for the first time, other than a brief period during the pandemic, for the first time in more than a decade.
The latest figures show 6.25m people waiting for 7.42m treatments (some people are on the list for more than one issue). That means more than one in 10 people in England are currently waiting for NHS treatment.
There continues to be a fall in the number who have been waiting longer than a year. It’s now 180,242, down from almost 400,000 in August 2023 and over 300,000 in June 2024, the Conservatives’ last month in power.
But that number is still incredibly high by historical standards. It remains over 100 times higher than it was before the pandemic.
The government has a separate pledge that no more than 8% of patients will wait longer than 18 weeks for treatment, by the time of the next election. Despite improvements in recent months, currently more than 40% wait longer than this.
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.
Sir Keir Starmer’s claim he is U-turning on cutting winter fuel payments for pensioners because he now has the money is not “credible”, Harriet Harman has said.
The Labour peer, speaking to Sky News political editor Beth Rigby on the Electoral Dysfunction podcast, said the prime minister made the move as it was so unpopular with voters.
He and his ministers had insisted they would stick to their guns on the policy, even just hours before Sir Keir revealed his change of heart at PMQs
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Winter fuel payment cuts to be reversed
Baroness Harman said: “It’s always been contested and always been unpopular.
“But the final straw that broke the camel’s back was the elections. The council elections and the Runcorn by-election, where the voters were saying, ‘this is not the change we voted for’.
“At the end of the day, you cannot just keep flying in the face of what voters – particularly if they’re people who previously voted for you – wanted.”
Baroness Harman is unconvinced by Sir Keir’s claim he can U-turn because there is more money due to good economic management by the government.
“I don’t think that’s credible as an argument,” she said.
“It really is the fact that voters just said ‘this is not the change we voted for, we’re not going to have this’.”
The challenge for the government now, she said, is deciding who will get the allowance moving forward, when they’ll get it, and when it will all be announced.
The Institute for Fiscal Studies has looked into the government’s options after Sir Keir Starmer said he is considering changes to the cut to winter fuel payment (WFP).
The government could make a complete U-turn on removing the payment from pensioners not claiming pension credit so they all receive it again.
There could be a higher eligibility threshold. Households not claiming pension credit could apply directly for the winter fuel payment, reporting their income and other circumstances.
Or, all pensioner households could claim it but those above a certain income level could do a self-assessment tax return to pay some of it back as a higher income tax charge. This could be like child benefit, where the repayment is based on the higher income member of the household.
Instead of reducing pension credit by £1 for every £1 of income, it could be withdrawn more slowly to entitle more households to it, and therefore WFP.
At the moment, WFP is paid to households but if it was paid to individuals the government could means-test each pensioner, rather than their household. This could be based on an individual’s income, which the government already records for tax purposes. Individuals who have a low income could get the payment, even if their spouse is high income. This would mean low income couples getting twice as much, whereas each eligible house currently gets the same.
Instead of just those receiving pension credit getting WFP, the government could extend it to pensioners who claim means-tested welfare for housing or council tax support. A total of 430,000 renting households would be eligible at a cost of about £100m a year.
Pensioners not on pension credit but receiving disability credits could get WFP, extending eligibility to 1.8m households in England and Scotland at a cost of about £500m a year.
Pensioners living in a band A-C property could be automatically entitled to WFP, affected just over half (6.3m).
Chancellor Rachel Reeves has committed to just one major fiscal event a year, meaning just one annual budget in the autumn.
Autumn budgets normally take place in October, with the last one at the end of the month.
If this year’s budget is around the same date, it will leave little time for the extra winter fuel payments to be made, as they are paid between November and December.
Business Secretary Jonathan Reynolds told the Electoral Dysfunction podcast the economy will have to be “strong enough” for the government to U-turn on winter fuel payment cuts.
He also said the public would have to wait for the budget for any announcement.
Are Keir Starmer and Rachel Reeves falling out over winter fuel payments? Beth tells us what she’s been hearing in Westminster about a rift between the pair and although it’s denied by Number 11, she’s heard there’s “palpable tension” between the principal players over the change in policy.
Also, with a vote on welfare reforms coming up next month, Beth, Harriet Harman and Ruth Davidson discuss how it will play out with Labour MPs and whether the government is losing its grip despite having such a big majority.
Plus, Beth speaks to Business Secretary Jonathan Reynolds about the winter fuel U-turn and whether the government can get a better deal with Donald Trump.