semiconductor industry faces economic headwinds from global trade friction

2025-05-27 general

Toronto, Tuesday, 27 May 2025.
A new report, the Trade Barriers Index (TBI) 2025, reveals a strong connection between trade restrictions and economic efficiency in the semiconductor market. The index analyzes 122 countries, showing how trade barriers limit the flow of goods, ideas, and innovation. For investors in major companies like NVIDIA and TSMC, monitoring trade policies is crucial. Trade restrictions directly impact supply chains, market access and stock performance. The TBI also correlates strongly with indices of economic freedom and prosperity, highlighting the broad impact of trade policies.

Trade barriers and economic impact

The Trade Barriers Index (TBI) 2025 examined 122 countries, which represent 80% of the global population [2]. The index highlights how trade barriers impede the movement of goods, ideas, and innovation [2]. Countries with lower trade barriers demonstrate a significant contribution to the global GDP [2]. Conversely, countries with higher barriers, such as India and Russia, account for 22.5% of the world’s population but only 7.5% of global GDP [2]. These findings suggest that trade barriers correlate negatively with economic output, potentially affecting investor sentiment and stock valuations [2].

Expert opinions and economic forecasts

OECD chief economist Álvaro Pereira stated that more needs to be done to raise productivity and tackle climate-related risks [1]. Trade disruptions are weighing on the economic outlook, adding to investor concerns [1]. A KPMG poll revealed that 76% of business leaders are preparing for a Canadian recession [1]. Rising global defaults further exacerbate these concerns, creating a risk-averse environment for investors in the semiconductor industry [1].

Anti-dumping duties and trade regulations

Anti-dumping duties, which are tariffs on imported goods sold below their fair market value, are also under scrutiny [7]. These duties can act as trade barriers and can reduce import volumes [7]. Discussions about potential new tariffs are ongoing, requiring careful consideration of international trade regulations [7]. Trade experts suggest that the current situation necessitates a thorough evaluation of international trade regulations, influencing decisions related to semiconductor investments [7].

EU’s carbon border adjustment mechanism

The European Union (EU) has implemented a carbon border adjustment mechanism (CBAM) [5]. The EU parliament approved revisions to CBAM, designed to simplify procedures for small and medium-sized enterprises (SMEs) [5]. The EU is maintaining strict regulations on high-emission sectors, covering 99% of carbon emissions from imported goods like steel and aluminum [5]. These regulations may impact semiconductor manufacturing, influencing investment strategies and supply chain management [5].

US trade policy impacts

According to Lao media, US tariff barriers could severely damage the global economy [4]. These barriers may increase the cost of US imports, potentially reducing international trade [4]. Major trade partners could face decreased demand due to rising prices, and US consumers may experience higher prices and reduced purchasing power [4]. Retaliatory tariffs could disrupt global production chains, potentially reducing global GDP by approximately 7% [4]. Investors should closely monitor these developments to anticipate market reactions and adjust their strategies accordingly [4].

Domestic trade facilitation efforts

KPMG reported that 64% of business leaders consider removing interprovincial trade barriers a top priority [1]. Furthermore, 82% believe that eliminating these barriers would improve their company’s efficiency and productivity [1]. Streamlining processes for resource and infrastructure projects is also a priority for 56% of business leaders [1]. These domestic measures could partially offset the negative impacts of global trade barriers, providing some relief to investors [1].

Bronnen

trade barriers economic efficiency