This content was originally published by Radio Free Asia, and it is now being reprinted with permission.
U. S. President Donald Trump on Monday threatened tariffs of up to 100 % on computer chips imported from Taiwan, which produces about 90 % of the world’s most advanced chips.
Trump called China, Brazil, and India” great” at imposing tariffs on goods and said America may soon join them at the annual Congressional Institute surrender of Republican lawmakers held this year at the Trump National Doral Golf Club in Miami.
” In specific, in the very near future, we’re going to be placing taxes on international manufacturing of computer chips, electronics and medicine, to return creation of these necessary items to the United States of America”, Trump said. ” They left us, and they went to Taiwan, which is about 98 % of the chip business, by the way”.
Driven by industry heavyweight Taiwan Semiconductor Manufacturing, or TSMC, the self-governing and democratic island of Taiwan –- a U. S. ally -– produces about two-thirds of the world’s computer chips, including about 90 % of the most advanced chips, which are used in artificial intelligence and military technology.
The island’s” Silicon Shield” strategy, which aims to deter Beijing from invade Taiwan by putting too much pressure on the global economy in the form of any potential conflict.
Trump claimed that the tariff on Taiwan’s chips could be “25, 50, or even 100 %,” which he claimed would force the companies producing chips to decide to set up new factories in the US rather than Taiwan.
Additionally, Trump criticized the bipartisan , CHIPS and Science Act, which former president Joe Biden signed in August 2022, for providing billions of dollars in subsidies to microchip producers to return to the United States, contending that nothing was required.
” They’re going to come in because it’s good for them to come in”, he said. You must build your plant here in America if you want to stop paying taxes or tariffs. That’s what’s going to happen”.
The tariff king, you ask?
TSMC already opened a new manufacturing plant in Phoenix, Arizona, in 2022 using the subsidies from Biden’s CHIPS and Science Act.
But industry analysts say it could , take decades , for new U. S. microchip factories to catch up to those in Taiwan, which have for decades now led the world in their ability to imprint ever-smaller circuitry onto microchips using highly advanced lithography techniques.
TSMC founder Morris Chang in 2022 called U. S. efforts to unseat Taiwan’s dominance in making chips an “expensive, wasteful exercise in futility” and said the chips could end up being 50 % more expensive.
Still, Trump said there were other benefits to tariffing imports.
In his speech, he referred to President William McKinley, who served from 1897 until his assassination in 1901, as” the tariff king” and quoted him saying that the “foreign producer” contributed “nothing” to America and should “pay for the privilege” of market access.
” In other words, you have to pay for the privilege of coming into our country, taking our jobs, taking our product, destroying our country”, Trump said. America will once again be very wealthy and money will come into our pockets. It’s going to happen very quickly”.
He added that “relatively speaking,” America had been at its wealthiest between 1870 and 1913, when the federal government was primarily funded by tariffs rather than a large income tax on workers. As tariffs go back up, income and other taxes will fall, the president then pledged.
” Under the’ American First ‘ economic model, tariffs on other countries go up, taxes on American workers and businesses go down, and a sizable number of jobs and factories will return home,” he said.
Economists largely attribute the abundance of cheap goods produced in China to the low-inflation economic boom that America experienced from the 1990s, which has kept prices low despite rising incomes.
The added costs they would add to American importers purchasing less expensive goods from abroad, according to critics of Trump’s plans for universal tariffs, could result in a rise in inflation, which would frighten Americans who buy cheaper goods from abroad, in contrast to the promise to reduce inflation.
Trump has asserted that foreign producers will bear the additional costs and that American prices will remain unchanged.
