Trump's tariff threat: Chip industry braces for potential 300% hit
Washington, Monday, 18 August 2025.
The semiconductor market is on edge. Former President Trump is considering tariffs as high as 300% on imported chips. This move directly threatens TSMC, even if exemptions apply. Analysts are already predicting major market disruption, with one US chip equipment manufacturer, Applied Materials, seeing its stock plunge 14% on the news. The tariffs could reshape the global semiconductor landscape. The question remains: can TSMC maintain its competitive edge?
Tariff impact on TSMC
Trump’s proposal has sent ripples through the market, particularly concerning TSMC’s position [1]. While TSMC might qualify for tariff exemptions due to its U.S. investment plans, it’s uncertain if all its products would be exempt [1][2]. Bernstein analyst Stacy Rasgon questions why clients would opt for U.S.-made chips if tariffs are only lifted for the Arizona plant, rather than choosing cheaper, tariff-free chips from Taiwan [2]. This situation introduces logistical challenges and could impact TSMC’s competitiveness [1].
Market reactions and analysis
The market has reacted negatively to the tariff news [1]. The Philadelphia Semiconductor Index fell by 2.26% [1]. Applied Materials, a U.S. chip equipment manufacturer, experienced a significant drop, with its stock price plunging over 14% [1][7]. TSMC’s American depositary receipts (ADR) also saw a decline, falling 0.88% to $238.88 [1]. Some analysts believe that U.S.-based companies like Intel, GlobalFoundries, and Texas Instruments (TI) could potentially benefit from these tariffs [1].
Expert opinions and scenarios
Wolfe Research analyst Chris Caso suggests TSMC’s U.S. investment plans could secure exemptions under the “Section 232” clause [2]. Caso believes that TSMC’s clients won’t face relative disadvantages since they can all benefit from these exemptions [2]. However, the uncertainty surrounding the scope of these exemptions and potential logistical hurdles raises concerns [1][2]. The Trump administration is expected to announce its decision on the tariffs by the end of August [2].
Geopolitical and manufacturing considerations
These potential tariffs are fueled by concerns about national security and economic competitiveness [2]. They also reflect an ongoing effort to bolster domestic semiconductor manufacturing and reduce reliance on foreign suppliers [2]. The situation highlights the escalating U.S.-China tech rivalry and the strategic importance of semiconductor technology [1]. The tariffs could lead to technology transfer and significantly impact the cost of consumer electronics [1][2].