Trump's CHIPS demand creates a $52 billion headache for Congress
Lawmakers and the microchip industry are struggling to respond to President Donald Trump's sudden demand that Congress 'get rid of' the landmark CHIPS and Science Act, a popular $52.7 billion law that would be both politically and legally complicated to unwind.
Leaders in the Senate said Trump's request — issued during his joint address to Congress on Tuesday — was new to them and, in interviews, they did not put a high priority on following the president's direction.
The microchip industry is confused about the comment, and adding to the uncertainty, it was unclear to multiple senators Wednesday what exactly Trump was instructing Congress to do.
Rolling back the law itself would be a sharp reversal of one of the Biden administration's signature policies, one with broad bipartisan support and global implications. And while the Trump administration has asserted broader control over spending, any move to cut the CHIPS money would be procedurally and legally tricky, and run afoul of the many beneficiaries in Republican districts.
'First of all, how is he going to cancel it, right? Can you do it through budget reconciliation? Maybe he'll try,' Sen. Mark Kelly (D-Ariz.) told reporters Wednesday. 'But you normally have to do this through legislation, and you need 60 votes in the Senate, and a ton of Republicans are supportive of the legislation.'
CHIPS and Science passed in 2022 with bipartisan support — winning over 17 Senate and 24 House Republicans — and it was inspired by legislation crafted by Congress during Trump's first term. The law set aside roughly $50 billion to reduce dependence on geopolitically risky Taiwan — which makes most of the world's cutting-edge chips used for artificial intelligence and smartphones — by funding semiconductor factories and research in the U.S.
But Trump's request marked an escalation in his rhetoric around CHIPS, which he has long criticized as a wasteful giveaway to rich companies when tariffs could serve the same goal for free.
On Tuesday night, he called the law a 'horrible, horrible thing,' then turned to GOP House Speaker Mike Johnson and demanded he 'get rid of the CHIP[S] Act, and whatever's left over, Mr. Speaker, you should use it to reduce debt or any other reason you want to.'
Johnson acknowledged to reporters the next day that 'everybody has different opinions about it' — and took himself out of the equation. 'We're going to wait until the president's FY26 budget to see how he handles it.'
Senate Majority Leader John Thune seemed at a loss of words when answering for Trump's remarks.
'That was one of those statements I hadn't heard before, so I haven't given a lot of thought to it,' he told reporters. Thune added that he'd have to see if a proposal emerges to roll back the law but did not appear to be taking it too seriously: 'It was a part of the speech, but there were a lot of things in that speech.'
Republican senators are not sure if Trump wants them to find enough votes to void the original law, seize funds promised in contracts but not yet disbursed, or redirect the relatively small amount of unspent CHIPS cash. All three possibilities would implicate different parts of government: Congress, the Commerce Department and the courts.
Indiana Sen. Todd Young, a vocal advocate for CHIPS among Republicans, told reporters he had reached out to the White House for clarification, and his spokesperson said that Trump's comments 'are not consistent with the extensive conversations we've had with the administration about the many successes and future of the CHIPS program.'
Nearly 90 percent of the law's manufacturing dollars were already promised to chipmakers and inked into binding contracts by the end of last year, according to a POLITICO analysis. Companies including TSMC and Intel have started receiving billions from their awards. Reneging on that funding is almost certain to invite lawsuits, industry lobbyists and lawyers previously told POLITICO.
'The CHIPS portion has mostly been implemented. It's been one of the greatest successes of our time,' said Young, adding of the administration. 'My expectation remains that we will be actively working on them to improve the program.'
Chip industry groups were caught off guard by Trump as well. A spokesperson for the Information Technology Industry Council, which counts the world's biggest chip and tech companies as members, cited 'his long-standing support for increasing U.S. manufacturing capacity and restoring U.S. semiconductor leadership since his first administration.'
For that reason, 'we need to get clarity from the Administration about the President's comments on the CHIPS program last night,' the ITI spokesperson said.
Chipmakers' main voice in Washington, the Semiconductor Industry Association, declined to comment.
If a repeal through Congress does not happen, Trump's other options — such as dialing back CHIPS requirements or even revoking award money — could run through the Commerce Department. The CHIPS program is already facing disruption after layoffs hit the Commerce offices responsible for $50 billion of its subsidies. Nearly everyone from the 43 probationary staff fired was from the CHIPS Program Office, the entity overseeing multi-billion-dollar grants with chipmakers like Micron and TSMC — though Commerce officials and newly confirmed Secretary Howard Lutnick agreed to pare back plans for even deeper cuts, according to two former department employees.
Kelly told reporters Wednesday he plans to talk with Lutnick next week. Sen. Andy Kim (D-N.J.), who sits on the Senate Commerce Committee, told POLITICO he also intends to speak with Lutnick but has 'zero confidence' the secretary will stand up to Trump on the issue.
Later Wednesday, Thune reinterpreted Trump's comments as a chance to better the program instead of axing it. He said that Trump is right about needing to take off 'restrictions' attached to the money and 'if nothing else the point he was making is this program — this bill — hasn't been implemented the way it should have been.'
The more extreme option — a repeal — could be politically distracting at best or straight up destructive for Trump's party. CHIPS has incentivized dozens of new construction projects across America, created the promise of more than 50,000 jobs and ushered in over $400 billion in private investments, according to industry estimates.
Asked about repealing CHIPS, Senate Whip John Barrasso (R-Wyo.) agreed it is not a priority for his chamber right now. 'What we're doing right now is focusing on keeping the government open, that's next week. Working on reconciliation,' he said Wednesday. 'Those are our primary priorities.'
Johnson acknowledged Wednesday that when he suggested that Republicans 'probably will' try to repeal CHIPS on the campaign trail last fall, it did not go so well.
The speaker almost immediately walked that back after talking to a vulnerable New York Republican whose district was anticipating a megafactory from CHIPS Act recipient Micron. He clarified that 'the CHIPS Act is not on the agenda for repeal' and said he would try to streamline regulations to improve its implementation.
The law still has many overt Republican defenders.
Sen. John Cornyn (R-Texas), who voted for CHIPS, credited it on Wednesday with producing huge investments that have 'made it possible now for the president to announce this additional infusion of investment by TSMC.' Trump hosted the CEO of top Taiwanese chipmaker TSMC, C.C. Wei, at the White House on Monday to announce $100 billion more in new U.S. facilities, on top of its $65 billion in CHIPS Act commitments.
Others reserved judgment. But even Trump ally Lindsey Graham (R-S.C.) needed to hear more before backing the idea.
'I'd like to see what he'd want to replace it with, see what he's got in mind,' Graham, who also voted for CHIPS, told reporters. 'Generally speaking, I want to bring chip manufacturing here, but if he's got to do a different way to do it, I'm open-minded.'
Jordain Carney, Joe Gould and Adam Wren contributed to this report.
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