US President Donald Trump’s threat to levy tariffs against imported semiconductors creates additional stress for Taiwan, which is already menaced by increasing military pressure from the People’s Republic of China.
Trump’s threat also indicates the ascendancy within the White House, at least for now, of American unilateralism over the alternative of attempting to build a collective security bulwark against China.
On January 27, Trump said that “in the very near future” the US government would impose tariffs on foreign-produced semiconductors, explaining that the objective is to “return the production of these essential goods to the United States.” He then specifically mentioned that chip-makers “left us and they went to Taiwan.”
Trump said he wants foreign chip makers to build their factories in the US. He pledged to accomplish this through tariffs, which he said might be “25, 50, or 100%.” As a basis for comparison, in recent years the average US tariff rate has been around 2%.
This is a demoralizing development for Taiwan, which has already suffered the indignity of Trump unfairly and inaccurately saying on other occasions that Taiwan “stole” America’s semiconductor manufacturing business.
Taiwan’s premier chip maker TSMC agreed during the first Trump Administration to build semiconductor factory facilities in Arizona in support of Washington’s desire to reorient global supply chains away from China.
This despite the argument that offshoring chip production might make Taiwan more vulnerable to attack from China, because Chinese economic dependence on Taiwan-made chips is a disincentive against Beijing starting a war that would disrupt the chip supply.
The first of those Arizona fabs is now in operation, with another planned to open in 2028. It seems that TSMC’s reward for moving substantially toward fulfilling Trump’s previous demand was to confront a new danger of up to a 100% tariff in the US market.
Nor would slapping tariffs on Taiwan-made chips help Trump achieve one of his major campaign promises: bringing down the cost of living for Americans.
Building a semiconductor factory typically requires five to eight years. Even if chip makers immediately responded to Trump’s announcement by deciding to build their plants in the US, they would not start producing chips until Trump was out of office. In the meantime, the prices Americans pay for consumer electronics would likely rise steeply.
According to a 2023 study, American companies import 44 percent of their logic chips and 24 percent of their memory chips from Taiwan.
Trump’s harassment of Taiwan is a problem for the Lai Ching-te government. Lai’s Democratic Progressive Party (DPP) puts relatively heavy emphasis on the US as Taiwan’s security guarantor.
The opposition Kuomintang (KMT), on the other hand, questions US dependability, echoing a similar theme found in PRC propaganda. A KMT-affiliated think tank said in January, for example, that Taiwan could not depend on military support from the Trump Administration and should seek to improve relations with China.
The partisan divide is reflected in the 2024 edition of a survey administrated by Taiwan’s Academia Sinica and Soochow University. Among survey respondents who identified as DPP voters, 71% said they consider the US reliable. But only 16% of KMT voters held that view. Trump could help shift the Taiwan electorate toward support for politicians who favor policies more accommodating of Beijing’s demands.
The new threat of tariffs against Taiwan-made semiconductors says something about US foreign policy more broadly. The second Trump Administration enters office hinting at two possible US grand strategies.
Blunt unliateralism
The first is a blunt unilateralism in which America unabashedly looks out only for number one and engages in international cooperation, including alliances, only if it is immediately and visibly profitable.
This is Trump’s preferred approach. When it comes to tariffs, one of the foreign policy instruments most extolled by Trump and advisors such as Robert Lighthizer and Peter Navarro, both friends and foes get much the same treatment. Trump has threatened tariffs against Canada, Mexico and fellow NATO ally Denmark as well as cold adversary China.
China-focused collective security
The second possible US grand strategy is US-led collective security focused on countering China.
This approach sees US global influence as an asset that both directly and indirectly bolsters US security and prosperity. It seeks to leverage alliances and security partnerships as force multipliers that can help the US shape world affairs to America’s advantage. Since China and its fellow Authoritarian Bloc members oppose important parts of America’s global agenda, friends and allies who will help support that agenda have great value.
New Secretary of State Marco Rubio represents this view. Although he repeats the new party line that US allies must increase their defense spending so they are not free-riding on US protection, Rubio believes healthy alliances serve the US national interest. In his confirmation hearing, Rubio affirmed the usefulness of alliances. He met with his Quad (US, Japan, India and Australia) counterparts during his first full day on the job.
Cost-benefit
These two approaches differ on whether or not America’s security partnerships with other countries produce a return – in Rubio’s words, making America “safer” – that justifies the costs the US pays to maintain these partnerships. For Trump, the answer is no, while Rubio would likely answer yes.
Taiwan is a politically and strategically important frontline state. Its continuing ability to resist involuntary and violent annexation by the PRC is beneficial to the US, even if Taiwan enjoys a trade surplus with the US and controls some of the market share in some industries that US companies covet.
Taiwan is also heavily overmatched economically and militarily by its hostile neighbor across the Taiwan Strait. Taiwan pays for the weapons the US provides, and the US pays Taiwan no costs for military bases. Taiwan is a net contributor to the US-sponsored liberal regional order.
For these reasons, it is disappointing that Trump sees Taiwan as a target for a US shakedown. As in other Trump statements about Taiwan, unilateralism has prevailed over collective security. The idea of simply imposing a high US tariff on semiconductor imports has a superficial logic, but the practical impact would be politically, economically and strategically counterproductive. Perhaps Rubio will persuade Trump not to follow through.
Denny Roy is a senior fellow at the East-West Center, Honolulu.
Trump is a business-minded person. If his business incurred a loss, he would pull out. Nothing else matters to him!
Trump has a knack of offending almost everyone. He will drive Taiwan into the arms of China.
Under old Donnie, there is new Imperialism, a new Orange Empire that will attempt to take over, grab, & absorb Canada, Panama, Greenland, maybe even Ukraine. The western world will comply with the mobster tactics or they will be punish like Columbia was punished for not accepting the return of their migrants. Taiwan is in a lose – lose situation. The only way out of American Imperialism is a united European belief that Russia, China are not their enemy, but US is the threat to European economies, & security. Beliefs are religion, religion causes wars.
The only people who trust the EU are the Remainers in the UK. Russia is kaput and China is crushing the German car industry.
No place to turn to, comrade
There is no security without economic development. What Trump is doing to Taiwan is to hollow out its industry, in the long term, Taiwan economy will going down the toilet. At that time, reunification with China may sound like a great idea.
It would be unification, as the CCP has never ruled Taiwan. Also the Taiwanese don’t want to be ruled by Peking.
Who represented the entire China (mainland plus Taiwan) in the UN since the end of WW-2 until 1972? Which part of the world has an airline called China Air, and a national paper called China Times? Denny Roy probably doesn’t know, but the answer to these questions are: TAIWAN. So, it’s indisputable that Taiwan is part of China, so Mr Roy please stop repeating this nonsense in your article.
Voting patterns indicate the Taiwanese do not want to be ruled from Peking.
In the last elections, the pro-independence factions garnered well below 50% of the total vote. (I recall it was 42%?) The independence advocates only won because the egos of the two opposition parties would not allow them to team up. Nor are the youth of Taiwan delighted to serve their mandatory military service requirement. Did you?
They prefer the status quo.