Former President Donald Trump is calling for the repeal of the CHIPS and Science Act, the 2022 bipartisan law that provided $52.7 billion in government subsidies to semiconductor manufacturers in an effort to boost domestic chip production. Trump has repeatedly criticized the law as a wasteful corporate handout, arguing that the U.S. could have achieved the same results using tariffs—without spending taxpayer dollars.
Instead of the government paying companies like Intel, Samsung, and Taiwan Semiconductor Manufacturing Company (TSMC) to build factories in the United States, Trump believes that high tariffs on imported chips would have forced these companies to move production to the U.S. on their own. His position has sparked heated debate over the best way to secure America’s semiconductor supply chain.
As Trump pushes for the repeal of the CHIPS Act, the key questions remain: Was the law effective? Why does Trump want to cancel it? What has been built so far? And what does Trump propose as an alternative?
What Was the CHIPS Act Supposed to Do?
The CHIPS and Science Act, passed in 2022, was a response to the global semiconductor shortage and concerns that the United States had become too dependent on Asia for advanced chip manufacturing. In 1990, the U.S. produced nearly 40% of the world’s semiconductors, but by 2022, that number had fallen to just 12%, while Taiwan and China dominated the industry.
To reverse this trend, the CHIPS Act provided:
- $39 billion in direct subsidies for semiconductor manufacturing in the U.S.
- A 25% tax credit for companies investing in chip production.
- $11 billion for research and development, aimed at strengthening America’s ability to produce cutting-edge chips.
Supporters of the law argued that government incentives were necessary to compete with China, South Korea, and Taiwan, all of which heavily subsidize their own semiconductor industries. They also pointed to national security concerns, noting that modern military technology, from fighter jets to missile defense systems, relies on advanced microchips.
Did the CHIPS Act Work?
Since its passage, the CHIPS Act has spurred more than $400 billion in semiconductor investments across the U.S. Some of the most significant projects include:
- TSMC’s $65 billion investment in three chip fabrication plants (fabs) in Arizona.
- Intel’s $7.86 billion in subsidies, which helped secure a massive semiconductor facility in Ohio.
- Micron’s $6.1 billion in grants to expand its manufacturing capacity.
- Samsung’s $4.7 billion in government-backed incentives for its chip plant in Texas.
These projects were hailed as a major win for U.S. manufacturing, with companies promising to create thousands of high-tech jobs and reduce America’s reliance on foreign-made chips.
But Trump sees it differently.
Why Does Trump Want to Cancel the CHIPS Act?
Trump has long opposed the CHIPS Act, believing that the U.S. could have achieved the same results without giving away billions of dollars in taxpayer money. He has repeatedly criticized the legislation, calling it:
“A horrible, horrible thing. We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money, and they don’t spend it.”
Instead of subsidizing semiconductor companies, Trump argues that the U.S. should have simply imposed high tariffs on imported chips, forcing foreign manufacturers to build in America without receiving any taxpayer money.
In a recent speech to Congress, Trump blasted the Biden-era policy, urging House Speaker Mike Johnson to repeal the law and redirect unspent funds toward paying down the national debt or other priorities.
“You should get rid of the CHIPS Act, and whatever is left over, Mr. Speaker, you should use it to reduce debt.”
Trump’s belief that tariffs would have been more effective than subsidies was reinforced by a major announcement from TSMC. Just one day before his speech, the company revealed a new $100 billion investment in U.S. manufacturing, including two additional plants in Arizona.
Trump immediately credited his tariff threats for this decision, arguing that companies are moving production to the U.S. not because of subsidies, but because they want to avoid paying high tariffs on imported chips.
“All that was important to them was that they didn’t want to pay the tariffs, so they came and are building, and many other companies are coming.”
Was the CHIPS Act Bipartisan?
Yes. The CHIPS Act was one of the most significant bipartisan efforts in recent U.S. history. Democrats and Republicans both supported it, seeing semiconductor manufacturing as a national security issue. Even conservative lawmakers who typically oppose government intervention backed the bill, believing it was necessary to counter China’s dominance in microchip production.
However, not all Republicans supported it. Trump, House Speaker Mike Johnson, and other conservatives have criticized the law, calling it a corporate giveaway.
Johnson, who originally voted against the CHIPS Act, has suggested that Republicans may try to repeal it, or at the very least, remove certain provisions tied to climate policies and labor regulations.
What Is Trump’s Alternative?
Trump’s preferred approach to bringing chip manufacturing back to America is tariffs, not subsidies. Instead of using taxpayer money to lure companies, he believes the U.S. should have raised import taxes on foreign-made chips to make domestic production more attractive.
His proposed plan includes:
- Massive tariffs on semiconductors manufactured in Taiwan, China, and South Korea.
- No government subsidies—forcing companies to invest their own money in U.S. facilities.
- Deregulation to streamline factory construction and cut costs.
Trump has hinted that if re-elected, he could impose chip tariffs as early as next month, though he has not specified how high they would be.
Will Trump’s Plan Work?
The big question is whether tariffs alone would have been enough to bring semiconductor production back to the U.S.
Trump’s critics argue that building semiconductor fabs in the U.S. is far more expensive than in Asia, where governments provide generous subsidies, lower wages, and cheaper construction costs. Without some form of government assistance, they argue, companies would simply pass the cost of tariffs on to consumers—raising prices for everything from smartphones to automobiles.
But Trump’s supporters point to TSMC’s $100 billion investment as proof that tariffs work. If a company like TSMC is willing to expand in the U.S. without subsidies, they argue, it proves that corporations will invest if the economic conditions force them to.
What Happens Next?
Trump’s push to repeal the CHIPS Act will likely face fierce resistance from Democrats and some Republicans, especially those whose states have benefited from CHIPS-funded projects. Semiconductor companies will also push back, as many have already structured their expansion plans around the billions in subsidies they were promised.
Commerce Secretary Howard Lutnick has suggested that the government may review existing funding agreements, raising questions about whether the Trump administration could claw back some of the already disbursed funds.
While the future of the CHIPS Act remains uncertain, one thing is clear: Trump is determined to reshape the U.S. semiconductor industry on his own terms—and he’s not backing down.
