TSMC Faced 100% US Tax Threat, Says Trump; Taiwan Pushes For Swift Tariff Agreement

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Post on Apr 10, 2025

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TSMC Faced 100% US Tax Threat, Says Trump; Taiwan Urges Swift Tariff Agreement

Tensions rise as former President Trump reveals a potential 100% US tax threat against Taiwan Semiconductor Manufacturing Company (TSMC), prompting Taiwan to accelerate negotiations for a bilateral tariff agreement.

The semiconductor industry is bracing for potential upheaval following a revelation by former US President Donald Trump. Trump claimed he threatened TSMC, the world's leading contract chipmaker, with a 100% tax on its US operations. This aggressive tactic, according to Trump, was intended to pressure the Taiwanese company to invest more heavily in the United States. The disclosure throws a spotlight on the delicate balance between US-Taiwan relations and the global semiconductor supply chain.

This news comes at a crucial time, with Taiwan actively seeking to finalize a bilateral trade agreement with the US. The island nation, home to TSMC and a key player in global technology, is acutely aware of its economic vulnerability and is working to diversify its markets and secure its position in the face of geopolitical uncertainty. The threat of crippling tariffs underscores the urgency of these negotiations.

Trump's Assertions and Their Implications

Trump's statement, made during a recent interview, paints a picture of high-stakes negotiations between the US government and TSMC. While the specifics remain unclear, the implication is that the threat of a 100% tax was a significant lever used to encourage further investment in US-based chip manufacturing facilities. This action reflects the growing importance placed on domestic semiconductor production within the US, driven by concerns over national security and economic competitiveness.

The potential consequences of such a tax were substantial. A 100% tariff would have dramatically increased the cost of TSMC's products manufactured in the US, potentially impacting prices for numerous electronic devices and disrupting the global supply chain. It could also have significantly hampered TSMC's expansion plans in Arizona, where the company is investing billions of dollars in a new fabrication plant.

Taiwan's Response and the Push for a Trade Agreement

Taiwan's government has responded to Trump's claims by emphasizing the importance of a swift resolution to ongoing trade negotiations with the United States. The threat highlights the vulnerabilities faced by Taiwan's vital semiconductor industry and the need for a stable and predictable trade environment.

A bilateral trade agreement would offer several benefits, including:

• Reduced Trade Barriers: A formal agreement would aim to reduce or eliminate tariffs and other trade barriers, facilitating smoother and more efficient trade flows.
• Investment Protection: It could provide safeguards for Taiwanese investments in the US, mitigating the risk of future punitive measures.
• Enhanced Cooperation: The agreement would pave the way for greater economic and technological cooperation between the US and Taiwan.

Negotiations are ongoing, and both sides are reportedly working to finalize an agreement that addresses mutual concerns and fosters a stronger economic partnership. The outcome will have significant implications for the global semiconductor industry and the broader geopolitical landscape.

The Future of US-Taiwan Semiconductor Relations

The interplay between geopolitical tensions, economic interests, and technological advancements is shaping the future of US-Taiwan semiconductor relations. While Trump's actions underscore the complexities of this relationship, they also highlight the critical role Taiwan's semiconductor industry plays in the global economy. The successful negotiation of a comprehensive trade agreement would be a significant step towards ensuring a stable and secure future for this vital sector. The ongoing discussions will be closely monitored by businesses and governments worldwide. The outcome will significantly impact global technology supply chains and underscore the importance of secure and reliable semiconductor manufacturing.