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Trump To Tariff Chips Made In Taiwan, Targeting TSMC

I found the situation with Columbia quite interesting:

Trump holding off on tariffs after Colombia agrees to accept deported migrants on military planes, White House says

It's a game of high stakes poker and Columbia flinched. Let's see who flinches next.

I think Trump will be the person to flinch. Although he will get something meaningless to cover his retreat.

This is the moment that Republicans and Democrats in Congress, Corporate interests, consumer rights, anti communist alliance, and national security experts and practitioners will be united to kill his policy intension.
 
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I've been thinking about this some more. Lets say Trump goes ahead with these tariffs. Now, the only way they can have the effect intended, is when there are two competitors making chips to sell in the US. Company X manufactures in US, company Y at TSMC.
Company Y has tariffs applied to it's products and that gives Company X a competitive advantage. The first problem here is 90% of all companies manufacture at TSMC - so practically all products become more expensive for Americans with no competitive advantage given to any company. The time taken to move TSMC fabs to America would be about 10 years (even if that could be done). By that time Trump will be long out of office and the tariffs will be dumped.
A better ploy would be to support Intel and micron vs SK Hynix/TSMC/Samsung force American manufacturers to use US based companies
 
I've been thinking about this some more. Lets say Trump goes ahead with these tariffs. Now, the only way they can have the effect intended, is when there are two competitors making chips to sell in the US. Company X manufactures in US, company Y at TSMC.
Company Y has tariffs applied to it's products and that gives Company X a competitive advantage. The first problem here is 90% of all companies manufacture at TSMC - so practically all products become more expensive for Americans with no competitive advantage given to any company. The time taken to move TSMC fabs to America would be about 10 years (even if that could be done). By that time Trump will be long out of office and the tariffs will be dumped.

Everything Trump does will be legally challenged which is why I think it is a bluff. The bad news is that the US Government is incredibly bureaucratic and slow moving. The good news is that the US Government is incredibly bureaucratic and slow moving. Worst case is the next president will reverse everything.

Semiconductors are incredibly important in the world economy. It is hard for me to believe that anyone will be successful with tariffs on semiconductors that are now critical to modern life. Especially with the Stargate AI race and the "big beautiful datacenter buildings" that will employ thousands of US workers. Without TSMC those datacenters will be empty.
 
Yeah but you can start small and than expand TSMC was not made in a day or any other manufacturing biz
Vast oversimplification.
Everything Trump does will be legally challenged which is why I think it is a bluff. The bad news is that it the US Government is incredibly bureaucratic and slow moving. The good news is that the US Government is incredibly bureaucratic and slow moving. Worst case is that the next president will reverse everything.

Semiconductors are incredibly important in the world economy. It is hard for me to believe that anyone will be successful with tariffs on semiconductors that are now critical to modern life. Especially with the Stargate AI race and the "big beautiful datacenter buildings" that will employ thousands of US workers. Without TSMC those datacenters will be empty.
I have first hand experience with dementia in my family, and it really looks like trump has dementia. He gets fixated on words he doesn't understand and then just cant let them go. He keeps repeating and repeating them and reads sentences back to himself. Its very characteristic of my experience seeing the disease close up
 
I don't agree with Peter Zeihan on his takes on semis industry. However, his point regarding reindustrialization is quite spot on. Tariff man want to put taxes on everyone then he better shore it up by Made Everything in the USA.

 
TSMC exports far fewer products directly to the U.S. than you might think.

Does TSMC export Apple chips to the U.S.? No. TSMC ships its chips to China, where they are used to manufacture iPhones, which are then shipped to the U.S.

Also if AI servers are to be built in the U.S., they need to pay import tariffs for nvidia chips coming from Taiwan. However, if those servers are to be built in Mexico, no tariffs for GPU from Taiwan to Mexico. And also no tariffs for AI systems from Mexico to the U.S. That will force companies to build AI server in Mexico instead of USA.
 
Vast oversimplification.

I have first hand experience with dementia in my family, and it really looks like trump has dementia. He gets fixated on words he doesn't understand and then just cant let them go. He keeps repeating and repeating them and reads sentences back to himself. Its very characteristic of my experience seeing the disease close up
It seems like a case of "to a man with a hammer, everything looks like a nail" (i.e., the solution to every problem is now tariffs).

He needs to hear the industry, political, and regulatory pushback to understand it's not worth the hassle and to look for the next target.
 
The amazon fab costs 25%-30% higher than the one in taiwan. 25% tariff will even this out?

The simple answer is no.
A better ploy would be to support Intel and micron vs SK Hynix/TSMC/Samsung force American manufacturers to use US based companies

I think we need to understand the relationship between them and how semiconductor ecosystem works.

If you really want to separate them in groups, the following grouping is a more close to the real situation:

Group 1: Intel, but only on the logic side of the semiconductors, and only partially covers the market's needs.

Group 2: Samsung. Making some of the semiconductors used for logic or memory.

Group 3. Everyone else. Their relationships are complex, interesting, and effective. For example, Micron Taiwan contributes 60% of Micron output worldwide. TSMC and Micron's collaborations make HBM memory made by Micron Taiwan into Nvidia H200.

On the other hand, many iPhone's semiconductor components are made at places in countries other than Taiwan.

It will be foolish for the US government to redesign a semiconductor industry ecosystem or supply chain that no one really has the ability to control or understand, including Trump.
 
President Trump is preparing to place tariffs beyond Chinese assembled electronics to computer chips made in Taiwan, warning the tariffs could reach as high as 100%.

“In particular, in the very near future, we’re going to be placing tariffs on foreign production of computer chips, semiconductors and pharmaceuticals to return production of these essential goods to the United States,” Trump said in a speech to Republicans on Monday.


“They left us and went to Taiwan,” he then said in an apparent reference to how many of the leading US tech companies have been sourcing their processors from Taiwan’s TSMC, a top semiconductor manufacturer. TSMC has established a factory in Arizona, but much of its chip production remains in Taiwan, where it’s been serving clients including Apple, Nvidia, Qualcomm and AMD, among others.

“We want them to come back,” Trump said before slamming the US’s CHIPS and Science Act, which his predecessor President Biden signed to invest over $52 billion in domestic chip manufacturing.

“And we don’t want to give them billions of dollars like this ridiculous program that Biden has given everybody billions of dollars. They already have billions of dollars,” Trump said. “They’ve got nothing but money Joe. They didn’t need money. They needed an incentive. And the incentive is gonna be they’re not gonna wanna pay a 25, 50 or even a 100 % tax.”

“They’re gonna build their factory with their own money. We don’t have to give them money,” Trump added, later claiming: “They’re giving the money, they don’t even know what they’re going to do with it.”

The recipients of the funding, such as Intel, might disagree. Last year, Intel received $7.9 billion from the CHIPS Act, which will go toward expanding its factories in Arizona, New Mexico, Oregon and Ohio, where the company is building a new chip manufacturing hub. Even so, Trump is betting his tariff threat will push more US tech companies into migrating their chip manufacturing to the US over Taiwan.

“The only way you’ll get out of this is to build your plant —if you want to stop paying the taxes or the tariffs— you’ll have to build your plant right here in America,” Trump added. “That’s what’s going to happen at record levels.”

Still, it takes years to build a chip factory, meaning any tariffs on Taiwanese-manufactured chips risk causing price hikes for numerous computer products, such as Nvidia graphics cards, Apple iPhones and AMD processors, which all come from TSMC factories. That said, a lot will depend on how US trade officials implement such a tariff policy. TSMC-made chips usually aren’t exported directly to the US, but sent to China and other Asian countries, where they’re then assembled into consumer electronics bound for the US.

Am I the only one who reads Trump's words and wonders WTF is he thinking? His comments suggest he thinks Nvidia, Qualcomm and the fabless are gonna run out next week and spend $100B each to build fabs because of a tariff which may or may not be around once he leave office. Of all people, Trump, should know how long it takes to build things. The fact he believes these companies would build fabs should be a concern to anyone reading that article. His comments also suggests he thinks the fabless companies are/were receiving CHIPs funding. Not once in any article I've read on these chip tariffs has anyone mentioned the strategic importance of Intel, or the fact that Intel has been proactively building fabs since 2021, that they are an external foundry now, and that Intel proactively embarked on a journey back to leading edge 4 years ago. Also not mentioned is the fact that Taiwan law mandates that TSMC keep it's leading edge node production in Taiwan. So TSMC cannot produce leading edge within the USA by law. The options are: pay a tariff, use Intel leading edge fabs within the US, or some combination of those two. No fabless company is gonna go out and build fabs now due to Trump tariffs. This also lends credibility to rumors that some large, well known company is going to buy the entirety of Intel.
 
I present a cynical alternative theory about the tariffs that's gaining some traction on Reddit by a user named joergonix that also depressingly fits my world view:
I would estimate that only about 30% of Americans understand what a tariff is, and as such I believe the GOP are using tariffs as a way to shift the tax burden away from the wealthy. Their idea seems to be: convince Americans that tariffs are when someone else pays the bill, then convince us that this new revenue stream could offset income taxes (it won't even in the slightest), then lower the effective tax rate of everyone especially the wealthy thus having shifted the burden even more towards the middle class. This effectively becomes a national sales tax that won't show up as such and will look more like corporate greed and inflation rather than a tax or fee. This is a regressive tax.
 
I present a cynical alternative theory about the tariffs that's gaining some traction on Reddit by a user named joergonix that also depressingly fits my world view:

I agree that most Americans probably do not understand what tariffs do; but I think the cynical view here is reversing cause and effect.

Both parties ran as "pro-tariff" (Biden took Trumps tariff's and extended them, then promised more tariff's, like Trump -- during the phases of 2024 elections). This was done to court unions and other workers in the name of "job protectionism" -- to bring the work back to America*. While tariffs are regressive and affect the poor the most (just like printing money to cover the federal deficit is a regressive tax on the poor), the cause was "jobs protection" while the effect will be the further shift in tax burden onto the middle/lower classes.

*without mentioning that trade wars can lead to cold and hot wars.
 
Everything Trump does will be legally challenged which is why I think it is a bluff. The bad news is that the US Government is incredibly bureaucratic and slow moving. The good news is that the US Government is incredibly bureaucratic and slow moving. Worst case is the next president will reverse everything.

I don't think rise tariff needs congress approval or something like that,not from the experience of Trump 1.0 and Biden administration. They can just issue an executive order and rise tariff overnight
 
I don't think rise tariff needs congress approval or something like that, not from the experience of Trump 1.0 and Biden administration. They can just issue an executive order and rise tariff overnight

Legal challenge does not necessarily mean Congress but I really don't know how tariffs work. I certainly understand the concept but I do not know how they are implemented or will they even work.

If you had to bet, would your money be on Trump implementing the tariffs he has been threatening? Or would it be that tariffs are a bluff?

My money is on bluff to get countries to the bargaining table for other purposes. Reducing the trade deficit would be a good one.

 
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