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GPU Tariff Exemption Expires December 31, Could Spell Higher Graphics Card Prices

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Prices of the best graphics cards may get higher in early 2023 in the U.S. as the exemption on tariffs imposed several years ago by the Trump administration will expire on December 31. The Office of the United States Trade Representative may renew the exclusion, or graphics card manufacturers could try to find a way to work around the high tariffs.

“Two sources told me AMD Radeon, Intel Graphics, and Nvidia GeForce graphics cards are going to be subject to new import tariffs in January,” hardware industry veteran Kyle Bennett of HardOCP fame wrote in a Twitter post. “Anyone smarter than me (that is not saying much) know how to look that up and get some linkage? If so, December might be a better time to buy.”

We do not know what tariffs our colleague meant, but it looks like the import tariffs in question are not new, as one of Kyle’s readers pointed out. These 25% tariffs were imposed by the Trump administration several years ago to essentially penalize China-based hardware manufacturers — which included not only graphics cards, but also laptops, motherboards, and other devices. The Trump administration then agreed to temporarily lift the tariffs and then the Biden administration granted 352 exclusions to the tariff rules. These exclusions are set to expire on December 31, 2022.

Some manufacturers initially tried to import almost finished products to the U.S. to avoid paying punitive duties, but the list of items subject to the tariffs now includes things like “printed circuit assemblies, constituting unfinished logic boards,” which largely kills the practice. If the USTR does not reinstate the exclusions, then importers will have to pay a 25% duty on graphics cards starting January 1, 2023.

Meanwhile, graphics card prices have every reason to increase compared to 2019, even without the tariffs. The development of GPUs made using TSMC’s N5 and 4N (5nm-class) fabrication technologies is extremely expensive, and a physical implementation of a GPU (with software) costs north of $500 million. Manufacturing on one of TSMC’s N5 production nodes is also costlier (potentially twice as expensive) as making GPUs on TSMC’s N7 or Samsung’s 8LPP. Production costs are also higher now than they were several years ago due to rising salaries in China and inflation. Finally, even transportation is now more expensive than it used to be in 2019.

It remains to be seen if the 25% duty will indeed be imposed on graphics cards, motherboards, laptops, and other devices. Even if another exemption is granted, we’re not going to see new midrange to high-end GPUs for $200~$300 any time soon.

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