Will Trump’s Chip Tariffs Do What He Thinks They Will?

Summary

WSJ Tech News Briefing: "Will Trump’s Chip Tariffs Do What He Thinks They Will?"
Release Date: August 12, 2025
Host: Peter Ciampelli, The Wall Street Journal

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Introduction

In the August 12, 2025 episode of WSJ Tech News Briefing, host Peter Ciampelli delves into two significant developments in the tech industry: Disney's cautious foray into generative AI and former President Donald Trump's proposed tariffs on imported semiconductors. The episode offers in-depth analysis, expert opinions, and explores the potential ramifications of these initiatives on the industry and consumers alike.

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Disney’s Exploration and Challenges with Generative AI

Navigating Generative AI in Entertainment

Disney is striving to integrate generative AI into its creative processes, aiming to enhance user experiences and streamline production. However, the company faces internal and external resistance that complicates these efforts.

The AI Double of Dwayne "The Rock" Johnson

A notable anecdote highlights Disney's ambitious yet ultimately halted project to create a deepfake of Dwayne Johnson for a live-action rendition of the animated film Moana. Jessica Tunkel, the Wall Street Journal's Deputy Media Editor, discusses this with an unnamed Disney expert:

[01:56] Unnamed Disney Expert: "We had all the permissions and everything and the technology to do this deepfake. Yet they could not get comfortable with all the questions around what could it mean if we use this tool."

This example underscores the ethical and practical dilemmas Disney faces, balancing technological innovation with concerns over authenticity, legal rights, and audience reception.

Internal Dilemmas and Industry Concerns

The Disney expert elaborates on the company's cautious stance:

[02:45] Unnamed Disney Expert: "It's a fraught subject in Hollywood... There's the fear of upsetting talent, the fear of fans saying, 'Hey, this isn't real,' and the fear of who owns the copyright."

Disney's protective approach to its intellectual property (IP) further complicates its adoption of AI tools. The company prioritizes maintaining control over its characters and narratives, fearing that AI could blur these lines and introduce legal uncertainties.

Early AI Initiatives and Their Reception

Despite reservations, Disney has initiated AI-driven projects:

[03:30] Unnamed Disney Expert: "Disney created an AI-generated Darth Vader in Fortnite... even with some glitches, it was a success and a significant step forward."

This project illustrates Disney's willingness to experiment, albeit cautiously, acknowledging the necessity of understanding AI's potential without compromising their brand integrity.

Future Outlook

Looking ahead, Disney plans to continue its cautious experimentation with AI. The impending appointment of a new CEO will be pivotal in determining the company's strategic direction regarding AI integration.

[04:42] Unnamed Disney Expert: "They are going to continue to be cautious, but they're going to continue to experiment with things because they realize that they have to at least know what the game is."

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Trump’s Proposed Tariffs on Semiconductors: Intentions and Implications

Overview of the Tariff Proposal

Former President Donald Trump has proposed imposing a near 100% tariff on imported semiconductors, with exemptions for companies that build or plan to build chip manufacturing facilities in the United States. The primary objectives are to incentivize the purchase of U.S.-made chips and to encourage foreign manufacturers to establish production in the U.S.

Analysis by Asa Fitch: Potential Ineffectiveness

Asa Fitch, the Wall Street Journal's "Hurt on the Street" reporter, provides a critical perspective on the proposed tariffs:

[06:48] Asa Fitch: "These tariffs won't result in more US Chip production... advanced chip production in the US at least in the way that Trump talked about them last week."

Fitch argues that the exemptions undermine the tariffs' effectiveness. Major chip manufacturers like Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung Electronics, and Intel have already invested significantly in U.S. operations, likely qualifying for exemptions. Consequently, these companies may have little incentive to expand further in the U.S., contrary to the administration's goals.

Unintended Consequences and Market Dynamics

Fitch elaborates on the potential mismatch between the tariffs' intent and their actual impact:

[07:37] Asa Fitch: "These companies are more incentivized to import stuff tariff-free from other parts of the world where it's cheaper to produce chips than to make them here in the U.S."

This scenario suggests that instead of bolstering domestic production, the tariffs could inadvertently make imported chips more attractive due to existing exemptions, possibly leading to cheaper imports rather than fostering local manufacturing.

Impact on Major Players and Supply Chains

The complexity of the semiconductor supply chain makes it challenging to predict the full ramifications of the tariffs. However, as Fitch points out:

[10:35] Asa Fitch: "When you raise prices of goods, they tend to trickle down to consumers and to businesses who are buying those goods."

Higher chip prices could translate to increased costs for a wide array of products reliant on semiconductors, impacting both businesses and consumers.

Additional Measures: Nvidia and AMD's 15% Cut on AI Chip Sales to China

In a related development, Nvidia and Advanced Micro Devices (AMD) have agreed to a 15% reduction in their AI chip sales to China. Fitch analyzes how this intersects with the tariff strategy:

[08:57] Asa Fitch: "The 15% surcharge on these companies' revenues in China means the Trump administration is trying to make it more expensive to sell this stuff... If China sees these chips as essential to their broader AI strategy, they're going to pay a higher price."

While intended to limit China's access to advanced AI chips, the actual impact may be minimal if China deems these chips critical for its AI ambitions. Additionally, the financial burden on companies like Nvidia is relatively small compared to their overall revenues:

[08:57] Asa Fitch: "Nvidia is projected to make 200 billion plus in its current fiscal year. So $3 billion is maybe not a ton for that particular company."

Long-Term Effects on Companies and Consumers

The longer-term repercussions of the tariffs remain uncertain due to the lack of clarity in their implementation. Fitch emphasizes the unpredictability of the tariffs' structure and their ultimate effect:

[10:35] Asa Fitch: "The magnitude of [the impact] is impossible to gauge without knowing exactly what shape these will take."

However, it is clear that any increase in semiconductor prices will likely affect the broader market, potentially leading to higher costs for a multitude of consumer electronics and other tech-dependent products.

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Conclusion

The August 12th episode of WSJ Tech News Briefing highlights the intricate balance companies like Disney must maintain when integrating cutting-edge technologies like AI while navigating ethical, legal, and consumer perception challenges. Concurrently, Trump's ambitious tariff plans on semiconductors reveal the complexities of intervening in global supply chains, with expert insights suggesting that the intended outcomes may not align with actual market dynamics. As these developments unfold, their implications will resonate across the tech industry, influencing production strategies, pricing structures, and international trade relations.

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Notable Quotes:

• Unnamed Disney Expert ([02:45]): "There's the fear of upsetting talent, the fear of fans saying, 'Hey, this isn't real,' and there's the fear of who owns the copyright."

• Asa Fitch ([06:48]): "These tariffs won't result in more US Chip production... advanced chip production in the US at least in the way that Trump talked about them last week."

• Asa Fitch ([08:57]): "If China sees these chips as essential to their broader AI strategy, they're going to pay a higher price."

• Asa Fitch ([10:35]): "When you raise prices of goods, they tend to trickle down to consumers and to businesses who are buying those goods."

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Produced by Julie Chang with Deputy Editor Chris Sinsley. For more updates, stay tuned to The Wall Street Journal’s Tech News Briefing.

Transcript

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[Peter Ciampelli]

Welcome to Tech News Briefing. It's Tuesday, August 12th. I'm Peter Ciampelli for the Wall Street Journal. Like pretty much every company, Disney is trying to figure out how it can use generative AI. But it's facing pushback both from in and outside the company. We'll hear more about what Disney's been up to, including an attempt to make an AI double of Dwayne the Rock Johnson. Then Trump is threatening huge tariffs to try and incentivize companies to make chips in the US and to get other companies to buy US made chips. But our Hurt on the street writer thinks the result of those tariffs could be much different and potentially have the opposite effect. But first, in its efforts to navigate artificial intelligence, Disney is in a bind. It's been dancing with ways to incorporate generative AI, including an interactive Darth Vader chatbot that players can talk to in Fortnite. But some in the company worry about pushback from fans and potential legal complications. The Wall Street Journal's Bell Lynn spoke with Deputy Media Editor Jessica Tunkel about it.

[Jessica Tunkel]

Jessica, there's a great anecdote in your story about the star Dwayne Johnson and Disney's scrapped plan to use a deep fake of his face for the live action version of the hit movie Moana. What exactly does this anecdote illustrate about the challenges that face Disney and Hollywood when it comes to AI?

[Unnamed Disney Expert]

We love this story because you have the Rock who gave his permission actually for this to be done. The idea was Dwayne Johnson would not have to be at every shot. He wouldn't have to be there on set all the time. His cousin, who has his 6 foot 3, 250 pound stature was going to be his fake double. Basically, they were going to use his body and put Dwayne Johnson's face on it had also given his permission. So they had all the permissions and everything and the technology to do this deepfake. Yet they could not get comfortable with all the questions around what could it mean if we use this tool?

[Jessica Tunkel]

Why is it so complex for Disney to be more bold in how it uses AI for its creative endeavors this.

[Unnamed Disney Expert]

Is such a fraught subject in Hollywood. It was not that long ago that actors and writers were on strike saying, you cannot replace us with AI and the actors contract is coming up again. So you have the fear of upsetting talent. You have the fear of fans saying, hey, this isn't real. And there's the fear of who owns the copyright and who owns these characters that are created by AI. If we work with an AI company to do something, will we still own every piece of that? And Disney can't afford to let go of any of that. We spoke to the general counsel at Disney, who was very clear, like, we want to make sure Disney owns Darth Vader.

[Jessica Tunkel]

What are some early steps that Disney has taken in using AI inside its shows, movies or games?

[Unnamed Disney Expert]

So we've seen, like, bits and pieces. Disney has a joint venture with Epic Games, the owner of Fortnite, and they created an AI generated Darth Vader in the game. And within minutes, the gamers figured out a way to get the generated AI, Darth Vader, to curse at them. They had to fix that, and they did fix it within 30 minutes. And they did feel like even with that happening, it was a success. Just the fact that Disney did that is a huge step from where they were even five years ago.

[Jessica Tunkel]

How would you describe the dynamic inside Disney when it comes to using AI, albeit it's certainly very complicated?

[Unnamed Disney Expert]

Disney, they understand that this is something they need to do, and they want to do it the right way. So they have their team, they've created an AI group, they've done all those things. It's just that this is a company that has been historically probably the most protective of its characters and IP than any company.

[Jessica Tunkel]

And where do you think that this all ends up? Where do you think that Disney sort of comes to a conclusion on what the use of AI is amongst its creative endeavors?

[Unnamed Disney Expert]

I don't think Disney has to be a first mover on being the first one to use some AI tool for a specific purpose. They're going to continue to be cautious, but they're going to continue to experiment with things because they realize that they have to at least know what the game is. And next year, Disney is going to be naming its new CEO, and it will be really interesting to see who they pick if that person has been involved in these discussions, because it will tell us how Disney is thinking about how important AI is for its future.

[Peter Ciampelli]

That was Wall Street Journal deputy media editor Jessica Tunkel. Coming up, we'll dive deep into Trump's proposed tariffs on chips from overseas and why the exemptions would probably spare the biggest players. That's after the break.

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[Peter Ciampelli]

Trump has proposed a nearly 100% tariff on chips and semiconductors being imported from overseas, but he's allowing an exemption companies that build or plan to build in the US Won't have to pay. It's an attempt to incentivize US Companies to buy chips from US Makers and to get the companies that are making the chips to build factories in the US but our Hurt on the street writer Asa Fitch says that these tariffs won't result in more US Chip production. Asa, in your reporting you mentioned that advanced chipmaking is a game only few can play. What are the companies most threatened by these tariffs and what would the immediate effects be?

[Asa Fitch]

So the largest chip makers in the world are effectively Taiwan Semiconductor Manufacturing Co. Or TSMC, and Samsung Electronics and Intel, the US based chip maker. Those companies will be affected in different ways by these tariffs if they go into place. Now Trump wants to put in place, he said, a 100% tariff on imports of semiconductors. It's a very complex supply chain. Things move around all over the place all the time, so it's hard to come to a very certain answer about what that impact will be. One thing it doesn't seem like these tariffs will do, though, is seriously incentivize chip production in the US Advanced chip production in the US at least in the way that Trump talked about them last week.

[Peter Ciampelli]

So why isn't that the case? And could there be any unintentional consequences of the tariffs?

[Asa Fitch]

The main reason why that's the case is that when Trump laid out this 100% chip tariff plan last week, he said that there would be exemptions for companies that invest a lot of Money in the U.S. now, all the large chip makers have already invested tons of money in the US So they've already passed that bar. And that means that they likely, based on the language that Trump used, will get exemptions. So there's no further incentive for these chip companies to build upon their existing manufacturing operations in the US Based on these tariffs, because the tariffs are gone. So if anything, these companies are Sort of more incentivized to import stuff tariff free from other parts of the world where it's cheaper to produce chips than to make them here in the U.S. so they, there's a little bit of a mismatch of the stated intent of these tariffs and the actual effect of them, at least as they appear so far to have been outlined. And granted that is kind of vague.

[Peter Ciampelli]

So the target of these tariffs are US companies buying foreign made chips. But on the flip side, earlier this week the news broke that Nvidia and Advanced Micro Devices are going to give the Trump administration a 15% cut of their AI chip sales to China. How does this news factor into Trump's goal with the tariffs?

[Asa Fitch]

That is really hard to tell. You could infer that the 15% surcharge on these companies revenues in China means the Trump administration is trying to make it more expensive to sell this stuff, obviously. And that means that, you know, that's going to affect demand in the typical sort of supply demand way. If you have higher prices, people will buy less of that stuff. In general, it's not entirely clear that's going to happen in this case because if China or Chinese companies or Chinese government sees these chips as essential to their broader AI strategy and the key to unlocking AI for China, like there's no way they're not going to pay a higher price. So the impact could be pretty limited. You know, there have been some analysts who estimated the impact on Nvidia of this additional fee something around maybe $3 billion a year. That sounds like a lot of money. But Nvidia is projected to make 200 billion plus in its current fiscal year. So $3 billion is maybe not a ton for that particular company. These are two different things, obviously, like the tariffs are meant to incentivize manufacturing in the U.S. these charges on sale to China are meant to disrupt in some way or limit the sales of AI chips in China. But there's two sides of the coin, if you will, or two different kind of objectives within the same envelope of national security. Protecting US interests, growing US industry, things like that.

[Peter Ciampelli]

And with Trump's proposed tariffs on the importing of chips and semiconductors, what would the longer term effects of those be on companies and on consumers?

[Asa Fitch]

It's hard to say right now. We don't know what exact shape the tariffs are going to take. One thing that's clear obviously, is that when you raise prices of goods, they tend to trickle down to consumers and to businesses who are buying those goods. So that could be the impact. But the magnitude of that is impossible to gauge without knowing exactly what shape these will take. And we've talked about the exceptions. Some of these companies, like Apple, qualify for exceptions so that the chips inside those iPhones aren't going to be charged a tariff. So it all depends on effectively, the implementation is really uncertain right now.

[Peter Ciampelli]

That was Wall Street Journal heard on the street reporter Asa Fitch. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with Deputy Editor Chris Sinsley. I'm Peter Ciampelli for the Wall Street Journal. We'll be back later this morning with TNB Tech Minute. Thanks for listening.

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