Trump talks himself into a rage: Huge chip tariffs against Taiwan

US President Donald Trump is firing back against his predecessor Joe Biden's US Chips Act. Instead of luring Asian chip contract manufacturers to the USA with subsidies, he wants punitive tariffs on semiconductors. Punitive tariffs of 25, 50 or even 100 percent would be enough of an incentive for chip contract manufacturers to want to build plants in the USA, says Trump.

In his speech to Congress, Trump only addresses Taiwan. He is obviously targeting the world's most important chip contract manufacturer TSMC, which produces for US giants AMD, Apple, Nvidia, Intel and Qualcomm, among others. However, TSMC and other Taiwanese manufacturers such as UMC also produce billions of chips every year using older manufacturing processes, for example for cars and household appliances.

Should the tariffs actually come into force, countless products, especially computer hardware, consoles and smartphones, would become even more expensive than they already are with other proposed tariffs. Punitive tariffs are payable on imports and are usually passed on to customers.

Trump tirade

"They left us and they went to Taiwan. [...] And we want them to come back. And we don't want to give them billions of dollars," says Trump. He then goes on a rant: "They don't even know what they're going to do with [the money]. I had people tell me: 'We have no idea. We didn't need money.' They're probably going to use the money to build in other places, other countries. It's a ridiculous plan. Very expensive and ridiculous."

There is no evidence of this. Usually, subsidies are strictly tied to conditions so that the money cannot be misused. The White House has uploaded the speech to YouTube – starting at minute 51:35.

A short time later, however, Trump says that companies that build their plants in the USA should receive help. What this will look like remains open.

Taiwan remains diplomatic

Meanwhile, TSMC has completed the construction of its first US semiconductor plant and is starting production with 4-nanometer structures. The company plans to build two more plants by 2030. The total costs amount to 65 billion US dollars – as part of the US Chips Act, the previous Biden administration promised subsidies of 6.6 billion US dollars.

Meanwhile, the US news agency Reuters has received a statement from the Taiwanese Ministry of Economic Affairs: “Taiwan and the US semiconductor and other technology industries are highly complementary, especially the US-designed Taiwan chip contract manufacturing model, which creates a win-win business model for Taiwan and US industries.”

The ministry “will continue to closely follow US policies in the future, and there will be close contact and cooperation between the two sides to ensure that Taiwan and US industries and national interests can develop to their mutual benefit in the face of global challenges.”

(mma)