President Donald Trump has pledged to make the United States the “world capital” of artificial intelligence, but his aggressive trade and tariff moves threaten to undermine Silicon Valley’s work on the crucial technology and weaken its competition with China.

Trump’s trade levies will drive up the cost of constructing, equipping and operating the data centers that companies such as OpenAI, Google and Microsoft are racing to build to power AI development, according to executives and experts in AI and data center construction.

Late on Friday, Trump unexpectedly exempted computers, smartphones and the powerful semiconductors known as GPUs crucial to AI projects from his tariffs. He had previously said there would be no exceptions.

The move initially appeared to provide major relief for the tech industry, but many ingredients of AI data centers such as construction materials, cooling equipment and backup generators are still subject to import taxes. And the exemptions do not appear to neutralize a 20 percent tariff that Trump levied on Chinese imports earlier this year.

Further complicating matters, Commerce Secretary Howard Lutnick said on Sunday that levies on semiconductors are still in the works and will be imposed via Section 232, a provision that governs tariffs related to national security and requires a lengthy process for study and comment.

OpenAI CEO Sam Altman, speaking in an interview on Thursday before Trump’s new exemptions were announced, said the company was urgently trying to figure out how the tariffs would affect the cost of running its AI models. “We’re working around-the-clock on this,” he said.

Trump and tech industry leaders see China as America’s primary rival in AI, and the president has said the U.S. must stay ahead to preserve its economic and national security. After taking office, he quickly moved to cut AI rules introduced under the Biden administration and make it easier to build and power AI data centers.

But Trump’s aggressive tariffs on China — now an eye-watering 145 percent — may end up helping it compete with the U.S. in artificial intelligence. The country is a key supplier of data center components, including those not newly exempted from some of Trump’s import taxes.

“As the administration continues to consider tariff policies, we strongly encourage efforts to provide certainty and the continued evaluation of impacts on critical data center equipment and components at this pivotal moment in the AI race,” Josh Levi, president of the Data Center Coalition, a trade group representing companies that operate data centers, said in a statement released before the exemptions were announced.

The AI industry and data center construction are core to America’s global competitiveness and national security, Levi said.

“It sounds good that chips are exempted, but on the other hand, there are so many other parts to the cost of a data center,” said Altman, who spoke in an interview Thursday after giving remarks at the Vanderbilt Summit on Modern Conflict and Emerging Threats.

The potentially steep cost increases caused by Trump’s tariffs, plus the unpredictable and fast-changing trade policy, have sent a wave of uncertainty through an industry that generally sees itself as confidently forging the future.

“The overarching observation is one of uncertainty and confusion and inability to really plan,” said Jay Biggins, executive managing director at BLS and Co., a real estate consulting firm that helps AI data center developers find sites and plan their supply chains. He spoke before the exemptions were announced Friday.