Taiwan is the world’s biggest producer of high-end computer processors and semiconductors. The newly-minted Trump administration has announced its latest series of tariff plans, including a “25 percent, 50 percent, or even 100 percent tax” on chips produced in Taiwan. If implemented, the price of nearly all electronics imported to the US will skyrocket later in the year.
President Donald Trump has pursued tariffs as an immediate and dramatic means of achieving his political goals, threatening both US allies and rivals with tariffs to force capitulation to his demands. Notably the Trump administration has immediately threatened America’s biggest and most immediate trading partners, Canada, Mexico, and China, with tariffs on all imported goods if various conditions are not met.
Extra charges for finished goods from China are already expected to increase prices on a macroeconomic level, from multi-billion-dollar companies buying fleets of vehicles to consumers buying flash drives. The US Consumer Technology Association estimates that Trump’s proposed tariffs on China would make the price of individual laptops, tablets cell phones, and game consoles rise by multiple hundreds of dollars per unit. And to be clear, that’s China alone, before considering additional tariffs on Taiwanese goods.
“In particular in the very near future we’re going to be placing tariffs on production of computer chips, semiconductors, and pharmaceuticals to return production of these essential goods to the United States of America,” Trump announced late Monday night. “They left us and went to Taiwan, where, which is about 98 percent of the chip business by the way, and we want them to come back, and we don’t wanna give them billions of dollars like this ridiculous has, give everybody billions of dollars. They already have billions of dollars.”
Trump continued, “They’ve got nothing but money, Joe! They didn’t need money, they needed an incentive, and the incentive is they’re not gonna want to pay a 25, 50, or even a 100 percent tax. They’re gonna build their factory with their own money. We don’t have to give ’em money, they’re going to come in because it’s good for them to come in.”
Trump is obliquely referring to the CHIPS Act, signed into law under former president Biden in 2022. The program stimulates investment in US domestic semiconductor fabrication, notably including new chip foundries in the United States in New York, Texas, North Carolina, and Arizona, among others.
Taiwan produces 70 percent of the global supply of semiconductors, with the industrial giant Taiwan Semiconductor Manufacturing Company (TSMC) accounting for the bulk of that production. TSMC partners with companies like Nvidia, AMD, Qualcomm, Apple, Arm, Broadcom, and dozens of others to manufacture their chip designs and ship them out to factories for electronics production. Intel is one of the only major companies that doesn’t partner with TSMC for its primary chips, but even an Intel-powered laptop will be packed with components ultimately produced in Taiwan, among other places.
Following the CHIPS Act, TSMC has opened two factories in the US in Arizona with production beginning later this year, and a third under construction. While the company has already announced partnership plans with major industrial companies including Apple, the US is only expected to get a 14 percent slice of the semiconductor market by 2032.
In the meantime, the bulk of chips for electronics will need to be imported. Tariffs imposed on these chips will inevitably cause prices to rise for consumers and businesses on essentially all hardware, notably including computers, smartphones, vehicles, industrial and medical equipment, and most secondary devices like monitors and headphones. In short, almost everything with a computer chip in it will rise in price.
So far Trump has expressed his intentions verbally, but there is no formal declaration of policy by the US federal government. If there’s any hope of reprieve from these intentions, it will come from Trump’s apparently close ties to the US tech industry. The leaders of the country’s biggest technology players have attempted to cultivate a close relationship with the president since his election victory in November, frequently visiting him in his Florida mansion, attending his inauguration and funding it with millions in generous donations.
It’s possible that their influence could convince Trump that the fallout of sweeping tariffs, for both consumers and the American tech industry, wouldn’t be worth the alleged stimulus to domestic production.
