Trump's chip tariff plan could hurt U.S.: Experts

Washington/San Francisco, Feb. 9 (CNA) While U.S. President Donald Trump's plan to slap tariffs on Taiwan-produced chips may bring back manufacturing jobs, the cost of doing so could fall on American firms and consumers, according to experts.

In a speech to Republicans on Jan. 27, Trump said he intended to impose tariffs on Taiwan to bring chip production to the United States, arguing that while about 98 percent of the chip business went to Taiwan, "we want them to come back."

"They [Taiwanese chipmakers] didn't need money [in the form of subsidies], they needed an incentive and the incentive is going to be that they're not going to want to pay a 25, a 50, or even a 100 percent tax.

"They're going to build their factory with their own money. We don't have to give them money," Trump said.

Asked what proactive steps can Taiwan take to dissuade Trump from imposing additional tariffs on Taiwanese semiconductors, Bonnie Glaser, the managing director of the Indo-Pacific Program at the German Marshall Fund, told CNA via e-mail on Sunday that Trump wanted to zero out the U.S.' trade deficit with Taiwan.

"Taiwan can take measures to zero out the trade surplus it has with the U.S. and TSMC could pledge to build more fabs and increase chip production in the U.S. That's what Trump wants," Glaser said.

Jessica Millan Patterson, chairwoman of the California Republican Party, shared a similar opinion on Saturday that tariffs are a strategy Trump would use to safeguard America's position.

Patterson told CNA that Trump would use every possible means to ensure the U.S. remains in the strongest and most advantageous position, and tariffs are one of his negotiating tactics.

The Trump administration has begun implementing higher tariffs, with a 10 percent tariff on Chinese goods taking effect on Feb. 4. Trump also announced on Sunday that a 25 percent tariff on imported steel and aluminum will be announced on Monday.

Additionally, Trump is expected to announce the imposition of "reciprocal tariffs" on Tuesday and Wednesday. According to U.S. media reports, these "reciprocal tariffs" would apply to all countries.

Speaking of Trump's possible action to slap 100 percent tariffs on Taiwan-produced chips, Randy Chang (張家豪), vice president of business development at NEO Semiconductor, told CNA that without Taiwan's semiconductor foundries, the U.S. would not hold a significant share in chip design.

Having lived in the U.S. for decades and previously served as TSMC's North America business manager, Chang said that semiconductor foundry manufacturing has never been the U.S.' strongest area.

"Without Taiwan's foundry industry, the U.S. IC (integrated circuit) design sector, as well as marketing and design of end products, might not have flourished as they do today," he said.

"If Taiwanese manufacturing companies are impacted by tariffs, the biggest victim could be the United States itself."

Regarding Trump's goal of increasing jobs in the U.S., Silicon Valley-based semiconductor expert Joe Chou (周信結), having served for HP Inc. and Honeywell International, said that chip manufacturing involves a cultural aspect and is not as straightforward as it may seem.

"The U.S. does not have a competitive edge in this area," Chou said, adding that Taiwan, in contrast, has never competed with the U.S. in the fabless semiconductor market. "That sector is not only America's strength but also the most profitable segment of the semiconductor industry," he said.

Both Chang and Chou shared the same opinion that if the U.S. government imposes tariffs on Taiwanese semiconductor products, those who will ultimately bear the brunt will be American customers of Taiwanese manufacturers, such as Nvidia and Apple because the increased costs will be passed on to them.