Donald Trump's Tariffs on Taiwan Microchips Spark Shock

President Donald Trump's proposal to place tariffs on imported computer chips from Taiwan has shocked commentators, who say the U.S. tech industry relies on the territory's contract chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC).

The move could mean more trouble for tech giant Nvidia, which was badly hit by the DeepSeek AI launch, because it sources its high end AI chips from TSMC, the world's most valuable manufacturer of its kind.

Newsweek contacted TSMC and the White House for comment on this story via email.

Why It Matters

Trump's move toward putting tariffs on one of the world's largest exporters of semiconductors comes as China is making significant breakthroughs in AI development, with the release of DeepSeek, which has threatened U.S. control of the AI industry. Taiwan's chip technology supplies are in high demand.

What To Know

Trump told Republicans in a speech Monday that tariffs on Taiwan would be aimed at returning the production of chips to the U.S, according to Business Insider. The President said companies would not want to pay a "25, 50, or even a 100 percent tax."

Taiwan produces around 90 percent of the world's top-level semiconductors via TSMC. These chips are vital to the systems used by Apple and other companies, as well as Nvidia, and tariffs could limit the access U.S. companies have to this vital market.

The strategy seems to be at odds with a U.S. strategy to contain China's access to the chips. TSMC is building a fabrication plant in Arizona, but it is not known how long it will take to be able to meet U.S. demand for high end AI chips.

Trump's Taiwan tariff proposal was met with skepticism from many familiar with the region, as it was seen as ill-timed considering accelerations in the race for AI developments.

"U.S. demand for Taiwan-produced chips now is fairly inelastic," Ryan Hass, a scholar on Southeast Asia, said on social media. "There aren't many viable alternatives. Fabs take years to build in US. Unless this is intended to push Taiwan to commit to U.S. investments/purchases, doesn't make much sense."

"If he puts tariffs on Taiwan, every electronics manufacturer in the U.S. is f*cked. TSMC makes the most important chips in the world," another viewer wrote.

However, not everyone was as negative about the policy. China-based commentator BarretYT said that the move was a "trap" set by Trump, writing: "Taiwan have fell right into the U.S. trap. Now that TSMC has buckled to U.S. pressure and built plants in the U.S., the U.S. has the latest Chip technology.

"Donald Trump is saying that he will put tariffs of 25%, 50%, 100% on Taiwanese Chips. Semiconductors is by far Taiwan's biggest export. How this turned out to be such a dumb move by TSMC and the Taiwanese govt."

What People Are Saying

In a statement responding to Trump's decision, Taiwan's Economy Minister Kuo Jyh-huei said: "Taiwan and the U.S. semiconductor and other technology industries are highly complementary to each other, especially the U.S.-designed, Taiwan-foundry model, which creates a win-win business model for Taiwan and U.S. industries. We will continue to pay attention to U.S. policy going forward, and there will be close contact and cooperation between the two sides to ensure that Taiwan's and U.S.' industries and national interests can develop in a mutually beneficial way in the face of global challenges."

What Happens Next

The U.S. is expected to continue close cooperation with Taiwan and its encouragement for TSMC to expand its manufacturing in the U.S, but the timing of any tariffs could be crucial to the U.S. tech sector.

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