Estimated reading time: 10 minutes

The Government Circuit: From Tax Policy to Tariffs, Denver to Delhi, Speaking Up for Electronics 

I had the privilege of attending the June 3 opening ceremony of AT&S’s HTB3 facility in Leoben, Austria—a milestone moment for Europe’s electronics ecosystem. HTB3 is now the first and only facility in Europe capable of both developing and producing high-performance IC substrates—the advanced platforms that allow powerful chips to connect, process, and function. As demand for AI, 5G, and other cutting-edge technologies grows, so too does the need for sophisticated substrates like those HTB3 will produce.

But HTB3 is more than just a factory. It is a powerful statement of what’s possible when government recognizes the strategic importance of electronics and makes targeted investments accordingly. The facility was born through close coordination between AT&S, the government of Austria, and the European Commission. AT&S CEO Michael Mertin called HTB3 a “lighthouse facility”—one that will attract further investment and innovation to Europe.

EU Advocacy
At the HTB3 opening, Michael Mertin delivered another powerful message: The Chips Act cannot be a substitute for a comprehensive electronics manufacturing strategy. Chips are only part of the equation. A secure, competitive, and resilient electronics ecosystem requires sustained investment across the entire value chain, including packaging, substrates, PCBs, and materials.

IPC has made that message central to our ongoing advocacy in Brussels and beyond. Last year, in concert with a coalition of peer trade associations and member companies, IPC issued an industry call to action, urging EU leaders to articulate an electronics manufacturing strategy to revitalize the resilience and competitiveness of European industry and enhance the region’s security. We asked that this strategy be developed and enshrined into law as part of a competitiveness deal or independently of it. 

This year, the industry continues to press its case with efforts aimed at influencing EU initiatives on competitiveness, a Chips Act II, and defense. Given current geopolitical trends, there is especially strong interest in bolstering the region’s defense industrial base. To this end, IPC recently concluded a report on the European defense electronics sector, highlighting again the gulf that exists between EU ambitions and the state of the electronics industry upon which those ambitions depend. 

To further the discussion on defense electronics, IPC partnered with the Aerospace and Defence Industries Association of Europe (ASD) to host an event on June 10 with industry leaders and senior government leaders, including officials from DG Connect, DG GROW, and DG DEFIS. Among industry participants, all key electronics segments were represented. The meeting has led to concrete next steps that will require further industry engagement led by IPC’s European Government Relations lead, Alison James.  

Tariffs: Recurring Shockwaves
Meanwhile, U.S. President Donald Trump’s evolving trade agenda continues to send shock waves through the electronics industry.  

In the latest plot twist, the emergency tariffs that were imposed in February and April under the International Emergency Economic Powers Act (IEEPA) were overturned by a federal trade court and then reinstated during the appeal. 

The ruling, if upheld, could invalidate the tariffs on China, Canada, and Mexico that were based on alleged fentanyl imports and illegal immigration; as well as the April 2 “Liberation Day” round, which imposed 10% tariffs across the board. The federal government would be required to halt the collection of those duties, and companies could seek refunds under the terms of the judgment. The White House has appealed and is sure to consider using alternate legal authorities to maintain its tariff agenda.

Adding to the strain, new 50% tariffs on imported steel and aluminum took effect in early June, directly impacting costs for enclosures, heat sinks, and other essential metal components. Meanwhile, a temporary exemption for certain semiconductors and related products was extended, giving some relief to chip-dependent manufacturers—but doing little to clarify the overall trade outlook.

Most recently, the U.S. and China reached another interim deal on trade, but it keeps tariffs relatively high and mainly eases exports of critically needed items. 

Like previous rounds of new tariffs and reversals, the latest actions have left manufacturers in a bind, unsure about whether and how to adjust their sourcing strategies. 

IPC has weighed in with the Trump administration on the negative impacts of tariffs on our industry, urging a broader approach. We will continue to call for a stable, strategic trade policy that strengthens America’s electronics supply chains.

The ‘Big Beautiful Bill’ and Bipartisan Priorities
At the end of May, IPC welcomed the U.S. House version of the “One Big Beautiful Bill Act” (OBBBA), the sweeping legislative package aligned with President Trump’s domestic agenda. That bill includes several IPC-backed tax reforms, including preservation of the 21% corporate tax rate, reinstatement of 100% bonus depreciation and R&D expensing, expansion of deductions for pass-throughs, and the creation of a new deduction for factory construction.

Over the next few weeks, the U.S. Senate will work through its own version of the legislation, with a goal of reconciling any differences with the House and sending a final package to the President by July 4. The outcome of these negotiations will be pivotal for electronics firms navigating tax and investment decisions.

Meanwhile, IPC also welcomed the reintroduction of the Protecting Circuit Boards and Substrates Act (PCBS Act), which proposes a 25% tax credit for U.S.-made PCBs and $3 billion in funding for domestic substrate production. These provisions would help shore up a key part of the U.S. electronics supply chain that has long been deemed vulnerable.

Congress Leaders Boost Drones, But What About PCBs? 
In yet another example of “shiny object” thinking, the defense title of the OBBBA includes a notable increase of $150 billion overall and $1.1 billion to strengthen the industrial base for small unmanned aerial systems (sUAS). 

Drones have become a key battlefield weapon, and the U.S. effort could be a promising opportunity for U.S. defense electronics manufacturers. But once again, printed circuit boards (PCBs) are left out.

In 2021, the Department of Defense identified PCBs as one of the top three supply chain risks for military drones. Despite this, no dedicated funding for PCB manufacturing was included in the FY25 enacted budget. Virtually every defense system, including sUAS platforms, depends on secure and resilient PCB supply chains.

IPC applauds Chairmen Mike Rogers (R-AL) and Roger Wicker (R-MS) for advancing legislation that prioritizes the defense industrial base, and we encourage Congress to ensure that PCB manufacturing is part of any serious defense supply chain investment strategy. 

By the way, the legislation that usually dominates this time of year—the appropriations bills for next fiscal year—will be coming up right after the OBBBA. 

Defense Supply Chain Warnings and Strategic Solutions
In a timely op-ed that echoes IPC’s “silicon-to-systems” strategy, Jim Will of the U.S. Partnership for Assured Electronics (USPAE) sounded the alarm on America’s microelectronics supply chain, calling it “dangerously fragile” and in need of repair. 

“We know where the vulnerabilities are, and we know who the assured suppliers are,” Will writes. “But instead of empowering and cultivating the ecosystem we already have, we’re still clinging to the status quo,” including defense supply chains based on cost and not security. 

Will’s five-point action plan calls for mapping vulnerabilities, funding domestic demonstrators, building fuller supply chains, enabling commercial viability, and holding integrators more accountable. 

The same theme was also detailed in a new IPC report detailing the scale of current semiconductor investments and the growing risks of the current U.S. approach.  

The report finds there are 90 announced chips-related projects across 28 states, fueled by $36 billion in CHIPS Act awards and significant private-sector funds, with an estimated 58,000 jobs in the pipeline. However, it also warns that the U.S. is underinvesting in critical back-end capabilities like advanced packaging and high-performance substrates, while other nations have aggressive strategies of their own. 

IPC will use this report to continue to call for a comprehensive, pro-manufacturing strategy that supports the full electronics value chain. 

IPC also drove the point in comments submitted to the U.S. Commerce Department for its investigation into U.S. dependence on semiconductors and related technologies. Instead of tariff solutions, IPC recommends a proactive strategy that combines targeted incentives for manufacturing along with international partnerships and measured trade tools. 

Europe: Omnibus Package
On the EU environmental front, IPC recently hosted a well-attended webinar on the European Commission’s “Omnibus” package, which is aimed at streamlining sustainability reporting under the Green Deal. Topics included the Corporate Sustainability Reporting Directive (CSRD), the Due Diligence Directive (CS3D), and the evolving EU Taxonomy Regulation. The main message: global compliance burdens are increasing, and preparation is essential. 

When the omnibus package came out in February, IPC called it a “step in the right direction” but said more must be done to achieve competitiveness and resilience.

Mexico and India: Strategic Growth Amid Trade Pressures
In Latin America, Mexico’s electronics sector is also feeling the crosscurrents of trade tension and regional opportunity. While U.S. tariffs have introduced new cost pressures, investment is booming in electric mobility and aerospace manufacturing. Notably, Chinese firm Yadea opened a $78.6 million electric motorcycle plant, and over 20 South Korean firms are evaluating expansions in Mexico.

Meanwhile, in Asia, the industry’s evolution continues, and IPC’s policy engagement continues to deepen. 

For example, India is working to strengthen its position in the global electronics and semiconductor landscape. Accordingto Business Standard, the government recently approved proposals under its Semiconductor Mission, including projects aimed at boosting domestic chip capacity.¹ In parallel, officials confirmed that the first group of eligible applicants under the Production-Linked Incentive (PLI) scheme for electronic components may be announced within the next month.² IPC Chief Economist Shawn DuBravac highlighted this momentum in a recent LinkedIn post, noting how India has evolved from a hub for call centers to an increasingly competitive player in advanced electronics. 

IPC’s second Tokyo Executive Policy Roundtable, held in May, brought together government and industry leaders to discuss semiconductor collaboration and global trade dynamics. Work is now underway on a US-Japan trade delegation later this year. 

Workforce Development: DC Advocacy and Colorado’s Bold Model
Back in the United States, IPC President and CEO John Mitchell was in Washington, D.C., recently for meetings with senior leaders from the U.S. Departments of Labor and Education. As the Trump administration looks to meet ambitious goals for increasing workforce development and building domestic manufacturing, Mitchell discussed several areas where federal support could make a meaningful impact:

• Strengthening incentives so more employers can access and benefit from apprenticeships and industry-recognized credentialing
• Working with state workforce boards to promote careers in electronics, from K–12 through college and mid-career transitions
• Streamlining access to funding and removing red tape so manufacturers can focus on training, not paperwork

IPC also took note of Colorado Gov. Jared Polis’s recent executive order to overhaul the state’s workforce system. The new plan aims to align education and industry through accelerated credentialing and public-private partnerships—mirroring IPC’s own workforce policy recommendations. As state and federal leaders consider future funding and legislation, IPC holds up Colorado as a model of innovation in action.

Looking Ahead
With the Senate gearing up to act on the “Big Beautiful Bill,” IPC remains active in shaping key provisions that could support domestic manufacturing for years to come. 

Simultaneously, trade uncertainties and global compliance pressures underscore the need for strategic coordination across borders and sectors.

From tax policy to tariffs, from Denver to Delhi, IPC’s GR team is ensuring that the voice of the electronics industry is heard—and heeded.

References

1. “Cabinet approves HCL-Foxconn joint venture under semiconductor mission,” Business Standard, May 14, 2025.
2. “Electronic parts PLI: Govt may clear 1st lot of eligible players in a month,” Business Standard, May 15, 2025.

Chris Mitchell is IPC’s VP of global government affairs. Contact him at ChrisMitchell@ipc.org.