Taiwan, the heart of the global supply chain for computer chips, woke up to news on Thursday that President Trump had placed a new 32% tariff on the island’s exports to the US. Excluding semiconductors.
The decision not to impose tariffs on the chip sector does not mean they will not come to Taiwan or anywhere else, including South Korea, another major source of tipping.
Taiwanese companies have spent billions of dollars over decades building networks of factories that carry out the complex processes of etching small circuits into silicon.
These chips, and the wide range of electronic devices that include them, are Taiwan’s major exports. And they are increasingly becoming the focus of Taiwan-US geopolitical ties, and have undergone significant changes in trading since Trump took office.
Trump has previously said that Taiwan has gained unfair control in building semiconductors and threatened to impose tariffs on the sector. He also denounces Taiwan, which relies on the US for political support for China’s claim that Taiwan is part of its territory and is too little to its own secure.
Taiwanese officials and businesses are rushing to ease the blow of Washington’s tariff threat. Last month, President Lai Qingte said that Taiwan is interested in purchasing natural gas from its long-term projects in Alaska.
A few weeks ago, the Taiwanese semiconductor manufacturer, the world’s largest chip maker, said it would spend $100 billion in the US to expand its operations in Arizona. TSMC announced plans for the factory during Trump’s first term and received great financial support under former President Joseph R. Biden.
When he announced the tariffs in Taiwan on Wednesday, Trump praised TSMC for his investment in the US. He and his aides hope that South Korean giants Samsung and SK Hynix and other chip companies that have pledged to invest in US businesses during the Biden administration, like Taiwan’s global wafer, will pledge to spend more.
Semiconductors are a complex target for tariffs as the supply chain for creating them is global and highly specialized. Most advanced chips are manufactured in Taiwan, but many are sent to other countries, such as Malaysia, for testing. Second, you can place the chips on an iPhone or artificial intelligence server in Mexico or China before these devices are sold to people all over the world.
“In reality, very few semiconductors are imported directly to the US. Most are incorporated into the final product,” said Jimmy Goodrich, senior advisor to technical analysis at RAND Corporation.
“It’s much more difficult than saying, “I’m going to slap the tariffs on steel,” added Martin Cholzenpa, a senior fellow at the Peterson Institute for International Economics. ”
Even the chips made by TSMC at its Arizona factory must leave the US to be packaged in other devices before they fall into the hands of American consumers.
“The chips currently made in Arizona will need to leave the US for a while before they can go back,” Ho said. “That’s just a fact of the global chip supply chain now.”
Trump announced 32% tariffs on Taiwanese goods exported to the US on Wednesday, with Taiwan sending nearly a quarter of its exports directly. In addition to non-taxable chips, Taiwan mainly exports electronic devices and components. Taiwan’s US Chamber of Commerce has said that Taiwan plays an integral role in the US economy, urging officials in Washington and Taipei to strengthen relations.
On Thursday, the Taiwanese government accused the tariffs of being unreasonable and unfair to Taiwan. The government will serve as a strong protest against US trade representative Lee Hui-Chy. The Taiwanese Cabinet said in a statement.
Taiwan’s exports to the US have been increasing in recent years, reflecting an increase in demand for Taiwan’s advanced technologies, including electronics and semiconductors, the statement said. President Lai said the Taiwanese government is concerned about the global impact of tariffs.
The Taiwanese government was “too optimistic about its relationship with Trump,” said Jason Huss, a senior fellow at the Hudson Institute and a former member of the Taiwan Congress for the opposition Nationalist Party. “I thought Trump was a bit naive to think it was good for them, especially after the TSMC announcement.”
Chris Buckley I contributed a report from Taipei, Taiwan.
Source: www.nytimes.com
