Washington: United States President Donald Trump has threatened to impose tariffs on Taiwan's semiconductor exports to encourage the reshoring of chip manufacturing, but experts are questioning his strategy, warning it could harm industries on both sides.
According to Focus Taiwan, Bob O'Donnell, chief analyst and founder of TECHnalysis Research in California, expressed confusion and surprise at the Trump administration's approach in a recent interview. O'Donnell stated that economic sanctions would not immediately boost chip manufacturing in the U.S., as building a chip fabrication plant involves significant financial investment and years of construction.
In a speech at a Republican event in Florida, Trump targeted Taiwan, where over 90 percent of advanced chips are produced, with a threat of imposing tariffs of up to 100 percent to force production relocation to the U.S. This approach contrasts with the previous U.S. administration's strategy of providing subsidies to domestic and foreign chipmakers for building fabs in the U.S.
O'Donnell critiqued Trump's economic policies as shortsighted, suggesting that the tariffs would not diminish Taiwan's dominance in advanced chip manufacturing but would instead increase the cost of Taiwanese-made chips. He warned of a significant negative impact on tech-related industries.
The proposed tariffs could harm Taiwanese chipmakers and American tech companies reliant on Taiwanese chip supplies, including Apple, Nvidia, Qualcomm, Intel, and AMD. Brian Peck, a former official at the United States Trade Representative and current assistant professor at the University of Southern California Gould School of Law, echoed these concerns, noting that the U.S. tech industry would face higher prices, which would be passed on to consumers.
Peck added that in the long term, the tariffs would pressure Taiwan's semiconductor producers, potentially leading to a sales decline as American companies might shift manufacturing to the U.S. or seek alternative suppliers not subject to the same tariffs.
He also suggested that Trump might use tariff threats as leverage to push Taiwan for increased defense spending or other concessions, drawing parallels to his dealings with Mexico and Canada. Trump had previously imposed tariffs on Mexican and Canadian goods, citing issues such as illegal immigration and drug trafficking, but later suspended the orders following agreements with the two countries.