The tariffs would ensnare cutting-edge smartphone and PC-related chips for Apple, AMD and Nvidia if enacted. But Trump is betting his plan will bring more chip production to the US.
spoiler
President Trump is preparing to place tariffs beyond Chinese assembled electronics to computer chips made in Taiwan, warning the tariffs could reach as high as 100%.
“In particular, in the very near future, we’re going to be placing tariffs on foreign production of computer chips, semiconductors and pharmaceuticals to return production of these essential goods to the United States,” Trump said in a speech to Republicans on Monday.
“They left us and went to Taiwan,” he then said in an apparent reference to how many of the leading US tech companies have been sourcing their processors from Taiwan’s TSMC, a top semiconductor manufacturer. TSMC has established a factory in Arizona, but much of its chip production remains in Taiwan, where it’s been serving clients including Apple, Nvidia, Qualcomm and AMD, among others.
“We want them to come back,” Trump said before slamming the US’s CHIPS and Science Act, which his predecessor President Biden signed to invest over $52 billion in domestic chip manufacturing.
“And we don’t want to give them billions of dollars like this ridiculous program that Biden has given everybody billions of dollars. They already have billions of dollars,” Trump said. “They’ve got nothing but money Joe. They didn’t need money. They needed an incentive. And the incentive is gonna be they’re not gonna wanna pay a 25, 50 or even a 100 % tax.”
“They’re gonna build their factory with their own money. We don’t have to give them money,” Trump added, later claiming: “They’re giving the money, they don’t even know what they’re going to do with it.”
The recipients of the funding, such as Intel, might disagree. Last year, Intel received $7.9 billion from the CHIPS Act, which will go toward expanding its factories in Arizona, New Mexico, Oregon and Ohio, where the company is building a new chip manufacturing hub. Even so, Trump is betting his tariff threat will push more US tech companies into migrating their chip manufacturing to the US over Taiwan.
“The only way you’ll get out of this is to build your plant —if you want to stop paying the taxes or the tariffs— you’ll have to build your plant right here in America,” Trump added. “That’s what’s going to happen at record levels.”
Still, it takes years to build a chip factory, meaning any tariffs on Taiwanese-manufactured chips risk causing price hikes for numerous computer products, such as Nvidia graphics cards, Apple iPhones and AMD processors, which all come from TSMC factories. That said, a lot will depend on how US trade officials implement such a tariff policy. TSMC-made chips usually aren’t exported directly to the US, but sent to China and other Asian countries, where they’re then assembled into consumer electronics bound for the US.
I don’t want to live in the economic conditions this dude is gonna create, but God damn if his erratic and impulsive threats and decisions aren’t funny as hell.
Imagine being a US company, one day you’re massively profitable, the next China unveils that it made a product that all of your clients make for a fraction of the cost and it works way better and it’s open source. The day after that your own president says your products are getting a tariff as high as 100% when you ship them back home.
I’d love to hear what they’re saying in some of these corporate offices and board rooms today. Surely absolute panic.
Though credit where credit is due: if the US wants to maintain being a super power, they need to have the ability to manufacture goods at home. Historically, tariffs would keep manufacturing at home.
Can tariffs bring manufacturing back? Maybe. Over the long term I believe so, but in the short term (unless there are backdoor deals where oligarchs are taking a financial hit to start manufacturing back up) it will not work. It will however bring much suffering.
I think these tariffs are the beginning of the empire’s death throes. It feels like the American leaders are trying desperately to hold on to control, and Trump is willing to try something different, rather than just doing business as usual.
Regardless of what happens, take care of yourselves, friends, family, and community.
There’s no fucking way that financial markets are ever willing to take any kind of a hit on purpose. It’s like half the rules and regulations in the US are meant to protect big businesses from ever being at a disadvantage. This is a short-sighted political economy by definition. I can see long-term planning coming from China, but from the US? No way.
That’s why they need to be disciplined by the state. Both Germany and Italy created capabilities to take over operations of companies while leaving shareholders in place because the state was willing to guide operations. The equivalent in the USA could happen.
Could it? I don’t know if there’s political will for that at all in 2025… the only disciplining the US capitalist state seems willing to do is of workers, rather than the bourgeoisie. That applies, in fact, to most western governments nowadays, I reckon, which is a sad state of affairs.
It’s really question of the bourgeoisie using the state to discipline the class into protecting itself. I don’t know if we’re there yet, but it’s a phase we need to watch for
I got to wonder now though, if the government keeps going at this pace and if the degradation also starts to hit some of the enforcement, will smuggling see an increase, will black markets become a major thing?
Definitely will
“What’s John Hinckley up to these days?”
“Is there a Luigi for Presidents?”