trump's tariff threat sends shockwaves through chip industry
Washington, Tuesday, 11 February 2025.
The U.S. government’s plan to impose tariffs on semiconductor chips, particularly targeting Taiwan’s giant TSMC, has sparked significant tension. President Trump’s proposal includes tax rates that could reach up to 100%. This move aims to incentivize semiconductor companies to increase investments in U.S. facilities, away from Taiwan, which currently dominates 98% of the global chip industry. Experts suggest the threat is a strategic negotiation tactic to pressure TSMC to boost production in the United States. However, there are concerns about the sufficiency of U.S. production capacity to meet domestic demands. Taiwanese authorities are set to engage in discussions with U.S. officials to gauge the administration’s intentions. The potential tariffs could disrupt global supply chains and lead to increased chip prices, affecting American tech companies relying on Taiwanese semiconductors. The situation’s outcome could reshape dynamics in the competitive semiconductor market.
Market reaction and stock impact
Semiconductor stocks experienced significant volatility following Trump’s tariff announcement [4]. Major chip manufacturers saw their share prices decline amid concerns about the potential impact of up to 100% tariffs on imported semiconductors [1][4]. TSMC, which serves 65% of North American customers, faces particular pressure as its stock value fluctuates in response to the tariff threats [1].
Taiwan’s strategic response
Taiwan’s Economic Ministry is taking immediate diplomatic action, dispatching senior officials to Washington for urgent discussions [1][3]. The delegation aims to understand Trump’s true intentions and engage with U.S. officials and business leaders [1]. Former Republican Asia-Pacific chairman suggests Taiwan could mitigate tariff risks by increasing U.S. weapons purchases and agricultural imports [3].
Production shift implications
Industry experts indicate TSMC’s Arizona facility, currently under 100% company control, might face pressure to list separately on U.S. markets [1][3]. The threat of tariffs appears designed to accelerate the transfer of advanced chip production to U.S. soil, particularly for 2-nanometer and more sophisticated processes [1]. Taiwan’s Economic Minister has acknowledged the inevitability of moving some advanced manufacturing to America [3].
Broader economic impact
The proposed semiconductor tariffs are part of a larger trade policy shift, as Trump simultaneously announced 25% tariffs on steel and aluminum imports [2][5]. Economic analysts warn these measures could significantly impact U.S. manufacturing costs and potentially harm American tech companies’ competitiveness in AI development [1][3]. The policy threatens to disrupt established supply chains and might lead to retaliatory measures from trading partners [2].