Tariffs of about 100% on chips and semiconductors are planned. This measure is intended to impact the industry’s international market dynamics.
There is an expectation that iPhones sold in the US should be produced domestically. Apple is encouraged to manufacture chips in Texas, Utah, Arizona, and New York.
Apple’s Proposed Actions
Apple is also suggested to create its own electricity supply. Setting up a manufacturing academy in Detroit is part of the plan.
Additionally, Apple is urged to establish a rare earth recycling line in California. These actions are proposed as part of a broader strategy.
Given the talk of a 100% tariff on semiconductors, we should anticipate immediate and significant downward pressure on the entire chip sector. This means we are looking at buying put options on semiconductor ETFs like the SOXX. The goal is to profit from a potential sharp decline in the coming weeks.
This threat is credible because the US remains heavily reliant on foreign chip production. A recent analysis from July 2025 showed that over 75% of advanced semiconductors are manufactured in Taiwan and South Korea, making the tech supply chain extremely vulnerable. We saw the SOXX ETF drop over 15% in May 2019 during a similar tariff escalation, providing a clear historical model for this trade.
Market Volatility and Trading Strategy
Uncertainty is now the main driver, so we should expect market volatility to spike. Buying calls on the VIX, or VIX-related products, is a direct way to trade this fear. These instruments are likely to become more expensive quickly as the market digests this news.
Apple (AAPL) has been singled out, making it a primary target for bearish bets. The demands to onshore manufacturing and build power infrastructure would be enormously expensive, hitting profit margins that were reported at a healthy 47% last quarter. We should consider buying AAPL puts with expirations several months out to capture the potential for a sustained drop.
While the tech sector will likely suffer, certain domestic industrial companies could see a benefit. Building new US-based factories requires materials, engineering, and construction, suggesting a potential pairs trade. We could go long on an industrial ETF like XLI while shorting a tech ETF like QQQ.
The broader tech market, heavily weighted in the Nasdaq 100, is now facing increased input costs across the board. The index has already seen a 12% run-up since the start of 2025, making it vulnerable to a sharp correction. We are therefore considering protective puts on the QQQ ETF as a hedge against our other positions or as a standalone directional bet.
Looking internationally, Taiwan Semiconductor (TSM) is the most exposed non-US company, as we know it controls over 60% of the global foundry market. A 100% tariff would be devastating for its business with American clients like Apple and Nvidia. Buying puts on TSM is one of the most direct ways to trade this specific geopolitical development.
