Trump's Trade Tactics Spark Semiconductor Sector Jitters

2025-08-01 general

Washington, Friday, 1 August 2025.
Donald Trump’s potential return to power is making semiconductor investors nervous. His history suggests he might reinstate non-tariff trade barriers. These restrictions could hit giants like NVIDIA and TSMC, impacting their stock values. Trade tensions already escalated this year, with average tariffs jumping from 2% to 17%. Trump’s approach could disrupt supply chains and raise costs, reminiscent of earlier actions that caused global financial unease. A key question is how the US, Netherlands, and Taiwan will navigate these potential trade headwinds.

Tariffs and trade tensions

Trump’s history of imposing tariffs is a cause for concern [2]. Economist Dr. Emily Carter notes that tariffs could disrupt supply chains and increase consumer costs [2]. Average tariffs have already risen sharply this year [2]. They moved from 2% to approximately 17% as of today [2]. These tariffs generated over $100 billion in revenue this year, about 5% of US federal revenue [2]. This contrasts with roughly 2% in previous years [2]. Treasury Secretary Scott Bessent anticipates $300 billion in tariff revenue for 2025 [2]. However, federal income tax brings in about $2.5 trillion annually [2].

Mexico trade deal extension

Trump recently extended a trade agreement with Mexico, offering a 90-day negotiation period [3][5][6]. Mexico will continue paying existing tariffs during this time [3][5]. These include 25% on fentanyl and automobiles and 50% on steel, aluminum, and copper [3][5]. Trump stated that Mexico agreed to eliminate non-tariff trade barriers [1][5]. Mexico’s President, Claudia Sheinbaum, confirmed the 90-day extension but did not mention changes to non-tariff barriers [1][5][6]. The complexity of trade deals with Mexico differs from those with other countries, according to Trump [5][6].

Broader impact and retaliatory measures

Experts anticipate potential retaliatory measures from other countries, possibly leading to a broader trade war [2]. Oxford Economics’ Ben May suggests these policies could increase prices and squeeze household incomes in the US [2]. Trump aims to reshape America’s global economic position through tariffs, promoting domestic manufacturing and foreign investment [2]. These trade strategies mark a shift away from free trade, impacting established economic patterns [2]. Concerns persist about the potential effects on global economic growth and international trade agreements [2].

India trade relations

Trump announced tariffs on India, set to begin today, at a rate of 25% [4][7]. He cited India’s high tariffs and strict non-tariff trade barriers as the reason [4][7]. These tariffs place India’s export duties above those of Vietnam, Indonesia, the Philippines, Japan, and South Korea [7]. The move follows failed attempts by India to reach a trade agreement with the US, including an offer to reach $500 billion in bilateral trade by 2030 [4]. Some analysts suggest these measures could negatively impact US-India relations [4].

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semiconductors trade barriers