Menu Home News Hardware Gaming Mobile Finance Deals Reviews How To Wccftech FinanceSemiconductor TechInsights: If The Average US Import Tariff Rate Remains Sticky At 40 Percent, The Global Semiconductor Market Will Shrink By A Third In 2026 Rohail Saleem • Apr 27, 2025 at 05:03pm EDT This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. With labyrinthine supply chains, a complex cost structure that often leverages state subsidies and explicit facilitation, and their strategic value as universal inputs for innumerable products, semiconductors currently lie at the very heart of the Thucydides Trap-type of tariff-related chess moves between the US and China. Yet, a new analysis now portends drastic implications for the global semiconductor sphere should the current regime of elevated tariffs become the norm. Report: If U.S.-China tariffs exceed 40%, next year's semiconductor market size could shrink by around 34% compared to initial forecasts According to market research firm TechInsights on the 26th, the growth of the global semiconductor market is expected to fluctuate… pic.twitter.com/f38lf91DaF — Jukanlosreve (@Jukanlosreve) April 27, 2025 To wit, the market research firm TechInsights has now published its expansive take on the dynamics of the tariff-related one-upmanship that currently persists between the US and China, uncovering worrying omens for the broader semiconductor sphere, especially in the case of no significant de-escalation. For the benefit of those who might not be aware, the Trump administration recently retreated from its earlier, more hardline stance on import tariffs, going so far as to introduce a series of de-escalatory measures in the face of a disorderly selloff in US Treasuries, including a concession to a global import tariff rate of 10 percent for all trading partners of the US barring China, which currently remains subject to a punitive 145 percent import levy. President Trump has also temporarily rescinded tariffs imposed on the import of semiconductors, electronic items, and smartphones (including Apple's iPhones) from China. For now, these products remain subject to a 20 percent Fentanyl-related levy. What's more, the administration is also reportedly considering limited tariff exemptions for some auto companies to allow them space to move their supply chains out of Mexico and Canada. Do note that imports of vehicles and auto parts from ex-China countries currently remain subject to a 25 percent levy. For its part, China has imposed a blanket tariff of 125 percent on all imports from the US. It has also banned the export of rare earth metals to the US while it drafts a policy to choke off supplies to the American military and its affiliates. As a refresher, rare earth metals are used in an entire gamut of industries, including in the production of magnets for electric motors. In contrast to the commonly held view, the US can't just start refining its own copious rare earth resources at the flip of a switch, for such a feat requires an intricate interplay of massive funding, energy, infrastructure, and vertically integrated supply chain partners. Coming back to the topic at hand, assuming a global US tariff rate of 10 percent, TechInsights believes the broader semiconductor sphere would represent a $844 billion market in 2026, as opposed to a $777 billion market this year. This corresponds to an annual growth rate of 8.6 percent. However, if the current situation persists, where the US and China have each imposed a tariff rate in excess of 100 percent, TechInsights finds that the global semiconductor market would shrink by 10 percent to $696 billion in 2025, and to just $557 billion in 2026, representing a plunge of around 34 percent relative to the base case scenario of a 10 percent global tariff (which posits an $844 billion semiconductor market in 2026). Interestingly, such a scenario would also raise the US average import tariff to 40 percent. In another scenario, if the US import tariffs on China settle at between 30 and 40 percent, and the global tariff rate rises to between 20 and 40 percent, the semiconductor market would be worth $736 billion this year and $699 billion next year. Subscribe to get an everyday digest of the latest technology news in your inbox Follow us on Topics Sections Company Some posts on wccftech.com may contain affiliate links. We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com © 2025 WCCF TECH INC. 700 - 401 West Georgia Street, Vancouver, BC, Canada