The Tariff Now Prices Where You Build

Under the administration's semiconductor tariff framework, exemptions are granted in proportion to how much a company builds inside the United States ^[1]. The rate a chipmaker pays is a function of its American footprint. TSMC's $165 billion pledge buys relief scaled to that footprint, and Apple's $600 billion commitment earns its own exemptions ^[2]. Trump has stated the principle in the plainest terms.

if you want your tariff rate to be zero, then you build your product right here in America. — Donald Trump

That is the stated policy, and it now runs across three sectors at once. In Canadian metals and autos the formula is binary. The 50% auto tariff gives zero tariffs to U.S.-based manufacturing and 50% to Canadian production ^[3]. Build in Canada and you pay; build in the United States and you do not. Metal fabricator Brenco shut its Canadian plant and moved to Texas to stay competitive, its CEO describing suppliers leaving goods on docks because they could not absorb the tariff ^[4]. In pharmaceuticals the formula is a threat. The 200% tariff was proposed explicitly to force domestic production ^[5]. The threat alone produced $139 billion in investment commitments before a single rate took effect. In semiconductors the formula is continuous. The rate scales with the investment, which is why the exemption framework is written the way it is. The same logic is being written into the trade pact itself. The USMCA is being rewritten from a 70% North American content rule to a 50% American content rule, and Canada was excluded from the initial bilateral talks ^[6]. The U.S. trade representative framed the pact's purpose as manufacturing relocation rather than trade facilitation.

But at the same time, it is clear that we have not achieved all of our goals with respect to strengthening U.S. manufacturing capacity and creating good jobs, and nearly all stakeholders advocate improvements. — Jamieson Greer

Canada repealed its Digital Services Tax to gain leverage, and the U.S. imposed 50% tariffs anyway and declined the pact's 16-year extension ^[7]. No trade concession lifted a Canada-specific tariff. The only paths to zero are physical relocation or absorption. The permanence move came in February, when Trump proposed replacing the federal income tax with tariff revenue ^[8]. The location fee stops being a bargaining chip and becomes a fiscal fixture. The mechanism is contested. Sixty-two percent of CEOs in a Yale survey say they do not plan to increase U.S. manufacturing investment ^[9]. The New York Fed found U.S. firms and consumers bore 90% of the cost of 2025 tariffs ^[8]. Samsung delayed its Texas plant despite being 90% complete ^[10]. Canada is answering with a $1 trillion investment summit to keep industry from leaving ^[11]. The design, though, is unambiguous. The formula reaches its logical end at the border itself.

Well, why don’t you just join our country. You become 51 – become the 51st state – and you get it for free. — Donald Trump

The only ways to pay zero are to move the factory or to move the border. The second is just the first taken to its extreme.