Tariff

Notes

US Section 301 measures made chip tariff classification and origin determination a board-level supply chain question.

Overview

A tariff is a customs duty charged on goods when they are imported, normally set as a percentage of their customs value according to how the goods are classified and where they are deemed to originate. Governments use tariffs to raise revenue and to give domestic producers a price advantage, and they also serve as a lever of trade policy. For chips, the duty that applies depends on classification and origin rules, not simply on where the finished part was shipped from.

How it works

Every imported item is first classified under the Harmonized System, the six-digit commodity nomenclature maintained by the World Customs Organization and used by more than 200 economies as the basis of their customs tariffs. Countries add their own longer codes and rates, and the duty owed is the rate multiplied by the customs value, plus any extra duties tied to origin.

Origin is decided by rules of origin. Non-preferential rules decide the origin used for ordinary duty rates, anti-dumping measures and marking; preferential rules decide whether goods qualify for lower rates under a trade agreement. The common principle is substantial transformation, the country where the last significant processing took place, tested for example by a change of tariff classification or a value-added threshold. For a chip, wafer fabrication, assembly and test may happen in three different countries, so origin rulings matter.

WTO members agree ceiling rates, called bound rates, and may apply lower ones. Since 1996 the WTO Information Technology Agreement has committed its participants, now 84, to zero duties on a list of IT products, and it was expanded in 2015. Governments can also take trade measures outside these commitments; in the United States, for example, the Trade Representative runs Section 301 investigations into foreign trade practices, one of which concerns China's targeting of the semiconductor industry.

Examples

• A trade compliance team classifying a packaged processor under its Harmonized System code before shipping it into a new market.
• An origin ruling deciding whether a chip fabricated in one country and assembled in another takes the origin of the wafer fab or the assembly site.
• The WTO Information Technology Agreement, under which 84 participants keep customs duties at zero on a list of IT products.
• The USTR Section 301 investigation into China's targeting of the semiconductor industry, launched in December 2024.

Why it matters

Tariffs change the landed cost of components, equipment and finished systems, so they shape where companies assemble, test and stock products. Trade compliance specialists classify parts and document origin, supply chain managers model duty costs into sourcing decisions, and policy teams follow new measures that can arrive with little notice.

In the chip lifecycle, tariffs bite mainly at manufacturing and distribution: when equipment and materials enter a fab, when wafers move to assembly and test sites in another country, and when finished parts or boards cross borders to customers. They also feed into architecture-stage decisions about where a product will be built.

It matters most to: Customs and Import-Export Specialist, Import/Export Trade Compliance Specialist, Supply Chain Risk and Resilience Manager, Trade Compliance Manager, Trade Policy Manager (Semiconductor)

Common confusions

Not the same as an export control

A tariff is a tax on imports that changes cost. An export control restricts whether certain items or technology may be shipped to a destination or user at all, usually for security reasons.

Not the same as a non-tariff barrier

Quotas, licensing requirements and technical regulations can also restrict trade, but they are not duties charged on the value of goods.

Not the same as a price list

In utilities and telecommunications, a tariff can also mean a published schedule of charges, which has nothing to do with customs.

Sources

1. Tariffs (opens in a new tab), World Trade Organization, 2026-10-22
2. What is the Harmonized System (HS)? (opens in a new tab), World Customs Organization, 2026-10-22
3. Technical Information on Rules of Origin (opens in a new tab), World Trade Organization, 2026-10-22
4. Information Technology Agreement (opens in a new tab), World Trade Organization, 2026-10-22
5. Section 301 Investigations (opens in a new tab), Office of the United States Trade Representative, 2026-10-22

Related terms

• Country of origin
• Incoterms
• Export controls
• Multi-sourcing
• Rules of origin
• Section 301

Where it appears on the Hub

Used on 15 pages of the Hub. In each group, the pages that mention it most come first.