The more things change, the more they appear to stay the same. Despite shifting headlines, tariff conditions remain largely unchanged since the announcement of the new Reciprocal Tariff regime and higher rates for China-origin products.
Leading up to the 90-day pause, we saw a sharp run on commodity products like memory modules, SSDs, and HDDs—some facing tariffs as high as 37%. U.S.-based inventory moved quickly, and within a day of the reciprocal tariff announcement, pricing turned volatile. Stockholders began repricing based on anticipated replacement costs with new tariffs factored in.
Shortly after, the exemption list expanded to include not just semiconductors, but also smartphones, PCs, and adjacent products like HDDs, GPU cards, NICs, SSDs, and memory modules. Announced late Friday, April 11, the update brought significant tariff relief for China-origin goods. Still, the administration emphasized that these exemptions are temporary—and that broader semiconductor tariffs remain on the table.
Meanwhile, other component categories—such as passives, electromechanical parts, connectors, and power supply units—were not included in the exemption and remain subject to a 10% blanket tariff. This is noteworthy given the last major wave of tariff changes under the Trump administration, which triggered a widespread supply run on passive components in 2018–2019. Already, we’re seeing lead times stretch for certain constrained products, including tantalum capacitors.
What Happens Next?
The most pressing question now: what comes next? Although the 90-day pause offers a window of temporary stability, there’s nothing stopping the administration from reimposing reciprocal tariffs during this period. However, given how markets have responded to rapid policy swings, a sudden shift now seems less likely—though not impossible.
When it comes to semiconductors, still exempt for now, there are a few likely paths for new tariffs to be introduced.
Scenario 1: IEEPA – Fast-Track Implementation
Reports suggest semiconductor tariffs could be imposed as early as this month. If that occurs, the administration would likely invoke the International Emergency Economic Powers Act (IEEPA), which allows the President to regulate commerce in response to a national emergency with foreign origins. This statute has been used previously to justify tariffs related to trade imbalances and national security. Although Congress is currently reviewing the Trade Review Act of 2025 to curb executive authority, no such limitations are yet in place—meaning swift action is still possible.
Scenario 2: Section 232 – Longer-Term Approach
Alternatively, the administration could pursue a slower path under Section 232 of the Trade Expansion Act of 1962. This process begins with a Commerce Department investigation to determine whether reliance on foreign semiconductor suppliers poses a threat to national security. The investigation must be completed within 270 days, after which the President has 90 days to act.
Given that a Section 232 investigation has already been initiated, this scenario appears increasingly probable. Based on historical examples (e.g., steel and aluminum in 2017), we’re likely looking at a December–January timeline before action is taken.
Why the Timeline Matters?
If Section 232 is used, the industry may see echoes of the 2018–2019 tariff cycle. Extended notice periods tend to fuel front-running and early ordering activity, which can drive up demand, deplete supply, and extend lead times—especially as companies prepare for potential changes ahead of Q1 2026.
China’s Retaliatory Tariffs: The Country of Diffusion Factor
China’s response adds further complexity. Traditionally, tariffs are applied based on a product’s country of origin—typically the location of final assembly in electronics. Recently, however, China has begun including the country of diffusion—where the semiconductor wafer was fabricated—in its tariff criteria.
This shift significantly widens the scope of impacted products. Manufacturers such as TI, ADI, Intel, and other IDMs that fabricate wafers in the U.S. but package and assemble components in Southeast Asia are now potentially subject to tariffs.
As a result, several distributors and OCMs have halted shipments into China while they assess exposure. Product labeling has emerged as a key concern. References to the U.S. on reels, outer boxes, or labels—even alongside other countries—may be enough to trigger a tariff. Some manufacturers have already begun updating label practices in response.
The impact in Asia has been immediate. Transactions have slowed, pricing has become volatile for affected brands, and inventory already located within China is increasingly scarce. Based on Fusion analysis of wafer fab locations, the manufacturers most at risk from this policy include TI, ADI, onsemi, Broadcom, Intel, and Micron.
Early Signs of Front-Running
Since the April 11 announcement, there’s been a clear increase in customer activity aimed at getting ahead of future tariff changes. While not yet widespread, we’ve observed a notable rise in order acceleration requests and inquiries around lead-time pull-ins. OCMs report similar trends, and Fusion has been fielding customer requests to expedite scheduled shipments or hold product in U.S. warehouses for rapid deployment.
Strategic Shifts Across the Industry
Wait-and-See Approaches Dominate
Many customers remain cautious. Multiple industrial and component OEMs have deferred major purchases to procurement teams. Several medical device and tech firms are pausing U.S. activity altogether. Enterprise storage and infrastructure customers are likewise holding back, waiting for further direction from leadership.
Buffer Stocking in Progress
Conversely, some customers are taking a more proactive stance. Fusion has seen large orders for DRAM and CPUs, with buyers aiming to build up inventory before the exemption window closes. Others are requesting shipment acceleration or asking us to hold product domestically.
Manufacturing Location Adjustments
Concerns around country-of-origin exposure are prompting shifts in production strategy. Some customers are leaning more heavily on Mexican assembly to sidestep tariffs on China-origin content. Others are exploring moves to Vietnam, Malaysia, or even U.S.-based manufacturing for critical SKUs.
Tariff Costs Passed Along the Supply Chain
Rather than absorb costs, many customers are adapting pricing structures to reflect the new tariff landscape. We’re seeing adjustments to lease and resale pricing, inclusion of tariff line items in quotes, and renegotiated terms with OEMs and end-customers.
Final Assembly and Customs Challenges
Finished goods imports are also being impacted. Delays are occurring in products with aluminum content or China-origin components, and customs scrutiny has increased. Some shipments are being flagged for inspection or reclassification.
Market Hesitation Downstream
Uncertainty is also weighing on broader demand. System builders and solution providers are reporting stalled decision-making and delayed orders from their customers, driven by tariff uncertainty and cost volatility.
Segments Seeing Minimal Disruption
Not all sectors are feeling the effects. U.S.-based manufacturers with sufficient component stock continue business as usual. Some cloud and server customers, buoyed by strong demand, are pushing forward with high-volume builds, largely unaffected to date.
Supplier Behavior Shifts
On the supply side, more OEMs and CMs are holding back inventory and choosing not to quote while the tariff situation unfolds. Many who were previously marketing excess product have paused those efforts, opting to wait for more clarity.
Stay Ahead of What’s Next
As the global trade environment continues to evolve, timely information is critical. Fusion Worldwide keeps a close watch on policy developments, pricing shifts, and supply chain impacts—so you can stay prepared, not reactive.
To view the most up-to-date tariff rates and stay informed on what’s changing, visit our [Tariff Rate Guide] or contact your Fusion representative.
