Breaking News: Trump To Impose Tariffs On Global Semiconductors And Chips Around Next Week

Trump to impose tariffs on global semiconductor and chip imports around next week

 

On August 5th, local time, in an interview with CNBC, Trump announced his intention to impose tariffs on imported semiconductors and chips "around next week," but provided no specific details on how this would be implemented. This isn't new; it's a consistent tactic throughout his presidency. However, this time, targeting semiconductors is likely to further escalate the already volatile global semiconductor industry chain.

 

The underlying dynamics are well known. Trump has continued his "America First" approach since his second term, frequently using tariffs as a tool in trade. Previously, he routinely imposed tariffs on the EU and China, and even pushed the CHIPS Act to encourage companies to build factories in the US. This time, targeting semiconductors is clear to anyone with a discerning eye, aiming to accelerate the shift of global production capacity to the US, reduce reliance on Asian supply chains, and maintain the US's dominant position in the industry.

 

Legally, the likely motive is to play the "national security" card, employing Section 232 of the Trade Expansion Act of 1962. Similar investigations have been conducted on products like semiconductors and pharmaceuticals, and results could be released as early as this week. If the investigation finds that imported semiconductors pose a security threat, tariffs of 25% to 50% could be in place.

 

Global Impact: Further Disruption of the Global Semiconductor and Chip Supply Chain

 

From a practical perspective, the global semiconductor supply chain will undoubtedly be disrupted. The United States currently relies heavily on Asian production capacity. Taiwan's advanced process technology accounts for 92% of global production, and South Korea is the leader in memory chips. If tariffs are imposed, companies like TSMC and Samsung will likely rush to build factories in the United States to avoid the tax. TSMC has already invested $165 billion in Arizona, and South Korea has increased its semiconductor support funds to 33 trillion won, both in preparation.

 

Cost increases are also inevitable. Apple, for example, relies primarily on TSMC for its mobile phone and computer chips. If costs rise by 15% to 20%, the price of end products will undoubtedly increase, and ordinary consumers will have to pay more. Even ASML has said that tariffs could disrupt trade. Although its second-quarter financial report was decent, it's still worried.

 

EU: Economic and trade frictions are intensifying, and geopolitical tensions must also be tightened. China has changed its semiconductor rules of origin, now counting wafer fabrication locations rather than packaging locations, in an effort to mitigate the impact of tariffs. The EU previously purchased $750 billion in US energy, resulting in a 15% tariff agreement, but semiconductor equipment may still face separate tariffs, leading to inevitable friction.

 

Taiwan: Different regions are facing tough times. Taiwan's semiconductor exports account for 20.8% of its total exports. If tariffs rise above 25%, exports to the US will likely become uncompetitive, and small businesses could even close. Taiwan's Directorate-General of Budget, Accounting and Statistics has calculated that a 20% tariff could cause annual economic growth to drop from 3.1% to 2.5%, or even negative growth.

 

South Korea: While memory chips are a strong performer, mature process products like automotive chips may lose their price advantage due to tariffs. The South Korean government plans to allocate 500 billion won to support small and medium-sized enterprises, hoping to overcome the current situation through technological upgrades.

 

China Mainland: We may actually accelerate domestic substitution. The Semiconductor Industry Association has clarified that the location of origin is determined by the wafer fabrication location. Many overseas design companies may shift wafer fabrication to domestic manufacturers like SMIC and Huahong. Analog chip manufacturers like Shengbang Semiconductor and SiRuiPu may see their market share increase.

 

The United States: For the US itself, this is a mixed blessing. While there may be some short-term capacity repatriation, building a complete supply chain will take years. The US currently faces a shortage of semiconductor equipment, materials, and talent, and will not be able to catch up quickly. If exports to China are restricted for companies like Intel and Texas Instruments, their market share could be taken away by Chinese companies. Furthermore, if tariffs rise, electronics and automobiles will become more expensive, potentially costing American consumers tens of billions more annually, further increasing inflationary pressure.

 

Regional responses may be limited, and chaos in the semiconductor sector is about to begin.

 

Nations will not sit idly by. Taiwan may invest more in the United States, perhaps by expanding TSMC's production capacity and purchasing some American agricultural products and energy in exchange for tariff reductions. However, there are also concerns within the island that excessive reliance on the US could lead to technology outflows and jeopardize its position as a "silicon shield."

 

In addition to its own investment, South Korea also wants to join forces with the EU and Japan to address the situation. For example, it could collaborate with the EU on advanced packaging technology to reduce its reliance on the US.

 

In China, semiconductors are a key focus in its 14th Five-Year Plan, and adjustments to rules of origin are being used to attract overseas orders. SMIC has already announced plans to expand 28nm chip production in Shanghai, taking orders that may be diverted from Taiwan.

 

However, there are still many uncertainties. The specific tariff levels, the products subject to imposition, and any exemptions will all have to wait for Trump's detailed announcement next week. If the tariff rate is lower than expected, perhaps 15% to 20%, the market impact could be mitigated; however, if it reaches 50%, the global semiconductor industry will face a major restructuring.

 

Companies also have their own plans. TSMC and Samsung may increase their efforts to build factories in the US, while small and medium-sized enterprises may relocate to Southeast Asia or India. Taiwanese packaging and testing companies like ASE and Powerchip are already considering expanding production in Vietnam.

 

The US's unilateral tariffs could weaken the WTO's multilateral mechanisms, making regional trade agreements like the "Quad" alliance between the US, Japan, India, and Australia more popular. However, China and the EU could also retaliate with reciprocal tariffs, potentially leading to an increasingly fragmented global trade landscape.

 

In general, Trump's move aims to use tariffs to divert supply chains toward the US and consolidate its technological supremacy. However, there are significant side effects: increased costs, disrupted supply chains, and heightened geopolitical risks. Companies must carefully monitor the details of the tariffs and carefully plan their supply chains. At the national level, a balance must be struck between industrial security and trade balance to avoid a mutually destructive outcome. Trump's specific announcements over the next week will be crucial in determining the direction of the global semiconductor industry.