By Adam Levine

Semiconductor stocks initially rallied in the wake of Wednesday evening's unanimous ruling from the U.S. Court of International Trade, enjoining the White House's tariff impositions from March and April, which would have the effect of dramatically lowering tariff rates from where they stood. By early afternoon Thursday, the PHLX Semiconductor Sector Index was up 0.8%, well off its premarket highs.

Investors may be realizing that the semiconductor industry isn't out of the woods, and it may still see additional tariffs. On April 10, additional tariffs on Chinese goods were raised to 125%, and reduced to 10% for the rest of the world. These were some of the tariffs overruled by the court. The following day, the White House exempted several categories of goods from the April 10 tariffs, including semiconductors, semiconductor manufacturing equipment, PCs and smartphones.

But on April 13, President Donald Trump clarified that these exempted goods could be seeing their own special tariffs like we already see for steel and aluminum, which weren't enjoined by the court. The potential semiconductor tariffs are under investigation by the U.S. Department of Commerce under Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs on imports that are considered a national security threat.

The Trump administration would like to see the whole semiconductor supply chain move from East Asia to the U.S., which will be a heavy lift, with or without the Section 232 tariffs.

The investigation could still take time to play out, but the enthusiasm for semiconductor stocks based on the court's decision may be short-lived.

For the companies involved, the latest court ruling just ramps up the uncertainty over tariffs. "We're just keenly watching this 232 review to understand what the implications will be," said Micron Technology executive vice president of global operations at a J.P. Morgan conference in May.

At the same conference, CEO Kurt Sievers of NXP Semiconductors echoed what investors have been hearing from earnings calls all year. "When we speak about uncertainty from the tariffs, it is the impact on our customers and on the macro," he said. "And that uncertainty, unfortunately, in my view, has also not gone away."

Adding to the uncertainty, the U.S. trade court has already issued a stay of its decision at the request of the Trump administration, while appeals are proceeding. The plaintiffs, a mix of U.S. importers and states, will have the opportunity to convince the court to remove the stay on Friday.

Write to Adam Levine at adam.levine@barrons.com

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May 29, 2025 13:01 ET (17:01 GMT)

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