President Donald Trump casually told Congress on Tuesday to scrap a $52 billion bipartisan law designed to supercharge the American semiconductor manufacturing industry.
“Your CHIPS Act is a horrible, horrible thing,” Trump said during a joint address to Congress on Tuesday night. “You should get rid of the CHIP Act, and whatever’s left over, Mr. Speaker, you should use it to reduce debt, or any other reason you want to.”
That landed with a thud among the Republicans who backed the sweeping legislation two and half years ago.
“I have to admit, I was surprised,” Sen. Todd Young of Indiana, the Republican co-author of the 2022 CHIPS and Science Act, told reporters on Wednesday morning. “It’s been one of the greatest successes of our time.”
The bill included $39 billion in subsidies for chip manufacturing in the US, plus $13.2 billion for semiconductor research and workforce development. The goal of the legislation was to make the US less reliant on chips manufactured in Taiwan, create US manufacturing jobs, and bolster competition with China — something that was especially important for national security-minded Republicans.
It passed both chambers on a bipartisan basis, garnering the enthusiastic support of then-Senate Minority Leader Mitch McConnell, plus the support of 16 other GOP senators and virtually all Democrats.
Trump specifically criticized the subsidies, saying that he prefers to bring chip manufacturing to America via tariffs. “They take our money and they don’t spend it,” the president said.
Just because Trump is asking Congress to repeal the law doesn’t mean it will happen — even though Republicans control both chambers and broadly support the president’s agenda.
‘I’d like to see what he’s going to replace it with’
It would take not just unanimous GOP support, but the support of several Democratic senators, to get a repeal bill through the Senate.
For one, Democrats are unlikely to go for it.
“People are already feeling the positive impacts and new economic energy in their towns in every corner of America, from Ohio to Arizona,” Senate Minority Leader Chuck Schumer said in a statement. “I do not think the president will find much support in Congress for weakening this legislation.”
“I don’t know what the hell he’s on,” Democratic Sen. Ruben Gallego, whose home state of Arizona is home to a TSMC plant built with CHIPS Act funding, told BI of Trump.
Even among Republicans, there’s a hesitancy to indulge Trump’s latest demand.
Republican Sen. John Cornyn of Texas defended the bill, saying it “made it possible” for Trump to announce an additional investment by TSMC earlier this week.
Other GOP senators who voted for the CHIPS Act said they want to see more details from Trump before they back repealing the bill.
“I’d like to see what he’s going to replace it with,” Sen. Lindsey Graham of South Carolina told reporters. “I want to bring chip manufacturing here, but if he’s got a different way to do it, I’m open-minded.”
“If there’s a consensus on addressing that problem in a better way, I’m open to suggestions,” Sen. Roger Wicker of Mississippi told BI. “It was the first I’d heard of that proposal.”
It’s also the case that the part of the CHIPS Act that Trump opposes has already been set in motion over the last few years. Young told reporters that the “chips portion” of the bill “has mostly been implemented,” and that he’s reached out to the White House to get more clarity on Trump’s position.
Before leaving office, the Biden administration allocated more than $33 billion in subsidies to 32 semiconductor manufacturers and suppliers.
To date, 20 companies have secured legally binding agreements, which collectively account for roughly 85% of the total allocated subsidies, Bloomberg reported. However, only about 11% of the allocated subsidies have been doled out so far: Funds are dispersed as companies hit certain benchmarks detailed in the agreements.
In November, a Commerce Department spokesperson told BI that the funding associated with a binding agreement could not be rescinded unless the company failed to comply with the terms of the deal. Absent that, they said rescinding funding would require an act of Congress.
“My expectation is that the administration will continue to support this supply chain resiliency and national security initiative,” Young said. “If it needs to transform into a different model over a period of time, I’m certainly open to that.”
Gallego argued that Trump’s comments could still have an impact on the semiconductor industry, even if legislative repeal doesn’t happen.
“If you are a business that’s trying to relocate, or ramp up chip supplies in the United States, and you think that there’s not going to be money for the CHIPS Act, you may not even start engaging, and you might start looking at other countries,” the Arizona Democrat said.
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