As the economy reels from President Trump’s punishing import taxes on China—now reaching a staggering 104 percent—sectors of the tech industry are bracing for even more pain. Trump threatened TSMC, the world’s most prolific silicon chip manufacturer, with company-specific tariffs if they didn’t accede to his demands.
According to Reuters, Trump threatened Taiwan Semiconductor Manufacturing Company with an additional 100 percent tax “if you don’t build your plant here” when speaking to the Republican National Congressional Committee. This would, presumably, be in addition to the current 32 percent tariff rate on imports from Taiwan itself. Approximately 60 percent of the world’s chip manufacturing occurs in Taiwan, focused on the most cutting-edge products, with TSMC producing the lion’s share. The US currently manufactures 12 percent.
TSMC, among competing chip manufacturers, had already committed to building fabrication plants within the United States as part of the CHIPS Act, a $52 billion stimulus package enacted during former President Biden’s administration. Last month, TSMC announced a $100 billion investment in US-based manufacturing centered in massive facilities in Arizona. This appears to be the announcement for which Trump is taking credit, in whole or in part.
TSMC’s current American capacity is completely sold through for the next two years. It seems extremely unlikely that TSMC—or any chip manufacturer—will be able to create enough output to supply even the domestic electronics demand of the United States within the next few years. The majority of new electronics will still need to be imported, in whole or in part, subjecting consumers to massively increased prices to offset the government’s import taxes on goods and materials.
Companies like Razer have paused shipments of laptops entirely, and both Nintendo and Framework have delayed the pre-order process for the new Switch 2 gaming console and lower-priced Framework 12 laptop, respectively. Vaio is advertising “tariff-free” prices for its Japan-manufactured stock that presumably arrived in the US before tariffs began being levied against fresh supplies.
While countries like South Korea and Japan are reportedly trying to negotiate with Trump, China’s position as the world’s leading manufacturer of finished goods puts it in a more advantageous position for trade negotiations, and it has instituted its own tariffs in response to Trump’s declarations. In short: China needs US imports far less than the US needs Chinese exports. Expect similar disruptions to continue indefinitely.
