Trump Eyes Tariffs On Semiconductors; Taiwan’s Trade Surplus At Risk

Semiconductors and other ICT products make up more than 70 per cent of Taiwan’s exports to the US, underlining how central the sector is to the island’s economy.

Taiwan posted a trade surplus of $73.9 billion with the US in 2024, up sharply from $47.8 billion the previous year, fuelled by demand for AI servers and chips during the artificial intelligence boom.

Source : Freepik

Taiwan’s economy could be hit hard if the United States imposes tariffs on semiconductors, a move reportedly under consideration by President Donald Trump.

The warning comes from the Chung-Hua Institution for Economic Research (CIER), which has flagged the island’s heavy reliance on the semiconductor industry and its vulnerability to Washington’s shifting trade policies, according to Focus Taiwan.

Semiconductors at the Heart of the Risk

Semiconductors and other information and communication technology (ICT) products make up more than 70 per cent of Taiwan’s exports to the US, underlining how central the sector is to the island’s economy, reported ANI.

“Compared with other countries, the semiconductor industry carries a heavier weighting for Taiwan in terms of industrial and economic development,” said CIER President Lien Hsien-ming.

Taiwan posted a trade surplus of $73.9 billion with the US in 2024, up sharply from $47.8 billion the previous year, fuelled by demand for AI servers and chips during the artificial intelligence boom.

Lien noted that a tariff on semiconductors could have a greater impact on Taiwan than the recently announced 20 per cent blanket tariff, which was reduced from the 32 per cent rate initially proposed in April.

Negotiations Underway Amid Growing Concern

President Lai Ching-te has acknowledged the risks, calling the 20 per cent tariff “provisional” and pledging to negotiate for a lower rate, while directly addressing the semiconductor issue with US officials. CIER Vice President Chen Shin-horng warned that targeted tariffs on chips are likely to be steeper than general levies, adding that Trump may be using Section 232 of the Trade Expansion Act as leverage to push for foreign investment in the US.

Taiwan Semiconductor Manufacturing Co. (TSMC), which is investing $65 billion in Arizona and has committed another $100 billion, has already cautioned Washington that any semiconductor tariffs could derail its investment plans. “New import restrictions could jeopardise current US leadership in the competitive technology industry,” TSMC warned in a letter to the Commerce Department in May.

US Commerce Secretary Howard Lutnick is expected to release findings from the ongoing investigation within two weeks, which will determine whether semiconductor tariffs will be imposed.