Taipei: President Donald Trump will “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the U.S., according to analysts.
According to Focus Taiwan, Trump’s plans to raise tariffs on chips manufactured in Taiwan to as much as 100 percent would backfire. Macroeconomist Henry Wu indicated that such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their U.S. clients and consumers, ultimately causing another wave of inflation. Wu emphasized that U.S. companies have no choice but to buy chips from Taiwan due to its significant share of the market, particularly in advanced computer chips where Taiwan holds over 90 percent of production.
Speaking at a House Republican Issues Conference, Trump announced his administration’s intention to impose tariffs on foreign production of computer chips and pharmaceuticals as a strategy to bring production back to America. Trump argued that with Taiwan holding about 98 percent of the chip business, the tariffs would serve as an incentive for companies to shift manufacturing to the U.S.
Stephen Ezell from the Information Technology and Innovation Foundation also echoed concerns about the potential consequences of Trump’s proposed tariffs. Ezell warned that the tariffs would likely cause Taiwanese companies to relocate their factories to other countries, rather than the U.S., and could ignite a global tariff war that would increase costs for American consumers and damage relations with key allies.
Recent U.S. tariff actions against Canada and Mexico, and additional tariffs on Chinese goods, reflect a broader strategy by Trump to combat illegal immigration and illicit drugs. However, economic experts like Lien Hsien-ming from the Chung-Hua Institution for Economic Research caution that such comprehensive tariffs could escalate into a global tariff conflict, further affecting mature chip producers who face a more competitive market.
Lien suggested that to mitigate the impact, Taiwan might consider allowing the New Taiwan Dollar to appreciate and reducing its trade deficit with the U.S. Taiwan, along with Canada, Mexico, and China, is among the top countries with which the U.S. has a significant trade deficit.