ANALYSIS/Trump's threatened tariffs may affect industries in both U.S., Taiwan: Experts

San Francisco/ Los Angeles, Feb. 12 (CNA) United States President Donald Trump has threatened to impose tariffs on Taiwan's semiconductor exports to encourage the reshoring of chip manufacturing, but experts are questioning his strategy, warning it could harm industries on both sides.

"I'm very confused and surprised that the Trump administration would try and do this," Bob O'Donnell, chief analyst and founder of TECHnalysis Research in California, said in an interview with CNA Wednesday. "It seems to reflect the fact that they don't understand how the semiconductor industry really works."

O'Donnell said economic sanctions would not boost chip manufacturing in the U.S. overnight, because building a chip fab requires billions of dollars and many years of construction.

In a speech at a Republican event in Florida late January, Trump took aim at Taiwan, where more than 90 percent of advanced chips are produced, threatening to impose tariffs of up to 100 percent to force Taiwanese chipmakers to relocate production to the U.S.

The proposed tariffs, if implemented, would reverse the approach of the previous U.S. administration, which sought to achieve similar objectives by providing subsidies to domestic and foreign chipmakers to build fabs in the U.S.

In O'Donnell's remote interview with CNA, he described Trump's economic policies as "shortsighted," arguing that they would not diminish Taiwan's leading position in advanced chip manufacturing but rather would drive up the cost of chips made in Taiwan.

"It will have a huge negative impact on every tech-related industry," he said.

The proposed tariffs would harm Taiwanese chipmakers, as well as American tech companies that depend heavily on their chip supplies, including Apple, Nvidia, Qualcomm, Intel and AMD, he said.

Brian Peck, a former official at the United States Trade Representative (USTR), expressed similar views, telling CNA that the U.S. tech industry, which relies on Taiwanese chips, would face higher prices in the short term.

Those increased costs ultimately will be passed on to American consumers, said Peck, who is currently an assistant professor at the University of Southern California Gould School of Law.

In the long term, such tariffs would put pressure on Taiwan's semiconductor producers, he said in an interview with CNA on Wednesday.

The Taiwanese semiconductor suppliers would probably face a decline in sales, because American companies "would be forced either to move manufacturing to the U.S. or find other suppliers that are not subject to the same level of tariffs," Peck said.

He said Trump is likely to follow through on the tariff threats, if his goal is to bring chipmaking back to the U.S., but the president's actions have been "somewhat unpredictable."

Trump might be using the tariff issue as leverage to push the Taiwanese government to increase defense spending or make other concessions, as seen in his dealings with Mexico and Canada, Peck said.

In that case, Peck said, "I think, those would be some of the issues that need to be discussed and worked out" between the U.S. and Taiwan governments.

Trump had announced a 25 percent tariff on all Mexican goods and most Canadian exports to the U.S., citing the need to combat illegal immigration and drug trafficking.

He later suspended the order, however, after the two countries agreed to take more active measures to address those issues.