Trade War 2.0: 25% Tariffs on Chips and Cars Reshape Global Supply Chains

The United States has entered a new phase of its trade war with tariff rates not seen since 1946. As of February 2026, the weighted average applied tariff rate on all imports has risen to 13.5%, with rapid-fire executive actions in January imposing 25% duties on semiconductors and automotive imports. The tariffs represent the largest U.S. tax increase as a percentage of GDP (0.54%) since 1993, costing the average American household $1,300 annually.

January 2026 Escalation

The current turbulence traces back to rapid-fire executive actions in January 2026. On January 14, Presidential Proclamation 11002 established a unique 25% revenue-sharing tariff on advanced logic semiconductors, requiring manufacturers to remit 25% of their sales revenue to the U.S. Treasury. On January 27, tariffs on South Korean vehicles were hiked from 15% to 25%, sending shockwaves through the automotive industry.

Supply Chain "Double Squeeze"

The freight market presents cause for concern, with analysis showing that actual goods shipment volumes do not support rosy economic forecasts. Maritime experts describe the current environment as a "double-squeeze" — companies face both tariff uncertainty and rising transportation costs that are expanding more quickly than at any time since April 2022.

"The 2026 tariff offensive represents a systemic shift toward economic nationalism. Higher transportation and inventory prices without corresponding warehouse price increases suggest inflation that has not yet been picked up at the consumer tier." — KPMG 2026 Trade Outlook

Supply Chain Restructuring Accelerates

Since the start of the US-China trade war in 2017, Chinese firms have set up production hubs in other countries while U.S. supply chains have lengthened, adding more nodes for potential disruption. U.S. direct imports from China have been declining with strong growth in imports from Vietnam, Mexico, and Taiwan. Honda recently relocated Civic Hybrid production from Japan to Indiana as an example of "tariff-hopping" maneuvers becoming commonplace.

Supreme Court Challenge Looms

The U.S. Supreme Court is preparing to hear Learning Resources v. Trump, a landmark case that will determine whether the President's authority under IEEPA allows sweeping sector-specific duties without Congressional approval. A ruling against the administration, potentially coming February 20, could immediately invalidate the current tariff structure, adding another layer of uncertainty for businesses trying to plan ahead.

Threatened and imposed retaliatory tariffs already affect $223 billion of U.S. exports. Combined with domestic tariffs, the measures reduce long-run U.S. GDP by 0.7%, according to the Tax Foundation. Companies best positioned to thrive will be those that embed trade intelligence into cross-functional decision-making and build agility into their supply chain strategies.