US President Donald Trump has threatened to impose up to 100 percent tariffs on Taiwan’s semiconductor exports to the US to encourage chip manufacturers to move their production facilities to the US, but experts are questioning his strategy, warning it could harm industries on both sides.
“I’m very confused and surprised that the Trump administration would try and do this,” Bob O’Donnell, chief analyst and founder of TECHnalysis Research in California, said in an interview with the Central News Agency on Wednesday.
“It seems to reflect the fact that they don’t understand how the semiconductor industry really works,” O’Donnell said.
Photo: Cheng I-hwa, AFP
Economic sanctions would not boost chip manufacturing in the US overnight, because building a chip fab requires billions of dollars and many years of construction, he said.
He described Trump’s economic policies as “shortsighted,” adding that they would not diminish Taiwan’s leading position in advanced chip manufacturing, but rather would drive up the cost of chips made in Taiwan.
“It will have a huge negative impact on every tech-related industry,” O’Donnell said.
The proposed tariffs would harm Taiwanese chipmakers, as well as US tech companies that depend heavily on their chip supplies, including Apple Inc, Nvidia Corp, Qualcomm Inc, Intel Corp and Advanced Micro Devices Inc, he said.
Brian Peck, a former official at the Office of the US Trade Representative, told CNA in a separate interview that the US tech industry, which relies on Taiwanese chips, would face higher prices in the short term.
Those increased costs ultimately would be passed on to American consumers, said Peck, who is an assistant professor at the University of Southern California Gould School of Law.
In the long term, tariffs would put pressure on Taiwan’s semiconductor producers, he said in an interview.
Suppliers of semiconductors based in Taiwan would probably face a decline in sales, because US companies “would be forced either to move manufacturing to the US or find other suppliers that are not subject to the same level of tariffs,” Peck said.
Trump is likely to follow through on the tariff threats, if his goal is to bring chipmaking back to the US, but the US president’s actions have been “somewhat unpredictable,” he said.
Trump might be using the tariff issue as leverage to push Taipei to increase defense spending or make other concessions, as seen in his dealings with Mexico and Canada, Peck said.
In that case, “I think, those would be some of the issues that need to be discussed and worked out” between Taiwan and the US, he said.
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