Trump proposes tariffs on Taiwanese semiconductors

Sparks concern over economic fallout

US president Donald Trump has announced plans to impose steep tariffs of up to 100% on semiconductors manufactured in Taiwan, a move aimed at pushing chip production back to the United States.

However, industry experts warn that such tariffs could disrupt global supply chains, raise consumer prices and strain diplomatic relations with a key US ally.

Speaking at a Republican event on 27th January, Trump criticised the CHIPS and Science Act, a bipartisan initiative that has driven over $450 billion in semiconductor and electronics investment in the United States. He argued that US semiconductor manufacturers did not require government funding but rather the incentive of avoiding hefty import taxes.

“They left us and went to Taiwan,” Trump said, referring to the reliance of major US technology firms on Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chip producer. “We want them to come back. And we don’t want to give them billions of dollars like this ridiculous programme that Biden has given everybody. They already have billions of dollars.”

Trump’s proposal is aimed at compelling companies like Apple, Nvidia and AMD, who source chips from TSMC, to move manufacturing to the US to avoid tariffs. However, critics argue that such a policy would have far-reaching economic consequences.

Economic and industry ramifications

While Trump insists that tariffs will incentivise chip production in the US, analysts suggest they could instead lead to increased costs for consumers and businesses.

Semiconductor production is a complex and capital-intensive process, requiring years of investment and billions of dollars. If tariffs make Taiwanese-made chips prohibitively expensive, companies may seek alternative suppliers from countries such as Japan, South Korea or India, rather than relocating production to the US.

Additionally, there are concerns that imposing tariffs on Taiwan while leaving Chinese chip imports unaffected could inadvertently benefit China’s semiconductor industry, making its products more competitive in the US market.

Beyond economic concerns, the proposed tariffs risk damaging relations with Taiwan, one of the US’s most critical allies in the Indo-Pacific region. The island plays a crucial role in global technology supply chains and is already facing increasing geopolitical pressure from China.