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.
These guys have wealth beyond imagine. If the value of everything in America becomes significantly less as a result of these economic policies, they’ll be able to pick up the peaces with the unimaginable amounts of money they all sit on.
They don’t sit on an unimaginable amount of money. They sit on an unimaginable amount of wealth. There’s a difference.
Cash in a bank account is only insured against loss up to 250K. You can open a bunch of bank accounts but you’re not keeping $600Bn in cash.
Land is subject to property taxes annually, it’s also very hard to reallocate in the face of natural disaster, and reallocating it has tax implications.
Securities, though, are taxed less, are more easily reallocated, and can scale infinitely. Their only risk is the stock market crashing out.
And all of it depends on the US dollar being worth something. They will be able to transfer a portion of their wealth into another foreign currency, but they will not be able to hold on to their big numbers, and that’s all that matters to them.
Land has inherent value whether the dollar does or not. But if a communist revolution were to come around and give all the land back… Well, so much for that.
It has inherent value but social upheaval can destroy its time exchange value. Just like at commercial real estate in Manhattan