Trump's tariff threat: tsmc caves, us gets factory

2025-04-10 tsmc

washington, Thursday, 10 April 2025.
Former President Trump claims his threat of a 100% tax on tsmc forced the company to build a factory in the United States. Trump boasted that he secured tsmc’s compliance without offering any subsidies, unlike the current administration’s $6.6 billion incentive. This ultimatum came as tsmc faces scrutiny, potentially a billion-dollar fine, over a US export control probe. The investigation relates to tsmc chips that ended up in a Huawei AI processor. The broader implications of Trump’s aggressive tariff policies on global trade remain a concern.

Trump’s tariff threat and tsmc’s response

Trump stated he warned Taiwan Semiconductor Manufacturing Company (TSMC) that it would face a tax of up to 100% if it didn’t build its factories in the U.S. [5][6]. He criticized the Biden administration for providing a $6.6 billion grant to TSMC’s U.S. unit in Phoenix, Arizona [1][6]. Trump claimed semiconductor companies don’t need the money [6]. TSMC, the world’s largest contract chipmaker, declined to comment on Trump’s statement [1][6]. TSMC had previously announced plans to invest $100 billion in U.S. chip-making plants over the next four years [1][2].

Taiwan’s reaction and stock market impact

Taiwanese officials hope to reach a quick agreement with the U.S. regarding tariffs [4]. Following Trump’s tariff announcement and related uncertainties, Taiwan’s stock market experienced a downturn [4]. The benchmark stock index fell by approximately 1.5% after two sessions of losses [4]. To stabilize the market, the government activated its $15 billion stock stabilization fund [4]. Concerns are growing in Taiwan over TSMC becoming a ‘U.S. chipmaker’ [1]. Some Taiwanese officials believe the government was overly optimistic about its relationship with Trump [1].

Geopolitical considerations and supply chain complexities

The situation highlights the complex geopolitical factors influencing the semiconductor industry [1]. Tariffs on semiconductors could negatively impact the global supply chain, as the manufacturing process is highly specialized and globally distributed [1]. Chips made in Taiwan are often sent to other countries like Malaysia and Mexico for testing and assembly [1]. These components are then integrated into various products before being sold worldwide [1]. According to the Wall Street Journal, the U.S. imported $82 billion worth of chips directly in 2024 [1].

Expert opinions and market analysis

Experts suggest that tariffs on semiconductors are more complicated than those on other materials like steel [1]. A senior research fellow at the Peterson Institute for International Economics, Martin Chorzempa, noted the intricacies of the semiconductor supply chain [1]. According to the Wall Street Journal, TSMC’s stock had already fallen nearly 27% in the first three months of the year [1]. Reduced chip purchases due to price increases could further decrease chip sales, impacting manufacturer revenue, growth, and stock valuations [1].

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tsmc subsidy tax threat