TSMC 'at front of the line' for exemption of Trump tariff: US scholar

Washington, Aug. 7 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) will be "at the front of the line" for an exemption from U.S. President Donald Trump's plan to impose 100 percent import duties on semiconductors given its large investment in the United States, an American researcher told CNA on Thursday.

Derek Scissors, a senior researcher at the American Enterprise Institute, said semiconductor tariffs could cover a large range of products, and Trump could say suppliers have to invest in a particular product to secure a tariff break.

That would be odd, Scissors said, "but I would think TSMC is at the front of the line for an exemption."

"There's no way TSMC is going to face a tariff, at least on the products it's making in the U.S.," he said.

On Wednesday Trump said the U.S. will impose a tariff of approximately 100 percent on imported semiconductors.

"We'll be putting a tariff on of approximately 100 percent on chips and semiconductors. But if you're building in the United States of America, there's no charge," Trump said in the Oval Office.

Trump's statement was typically vague and lacking in details, so it was unclear if he meant that companies making products in the U.S. would also have goods they make abroad be allowed entry into the U.S. tariff-free.

● Trump says U.S. plans about 100% tariff on imported chips

Investors felt that it meant TSMC will get a waiver from the 100 percent tariff on chips shipped into the U.S. from Taiwan.

After Trump's announcement, TSMC shares soared 4.89 percent to close at a historical high of NT$1,180.00 (US$39.57) in Taipei on Thursday and its American depositary receipts (ADRs) surged 4.86 percent later in the day.

TSMC is investing US$65 billion to build three wafer fabs in Arizona, with the first starting mass production in late 2024 using the advanced 4 nanometer process.

In March, TSMC announced it would "expand its investment in the United States to US$165 billion by boosting its U.S.-bound investment by US$100 billion over the next few years to build three more wafer fabs, two IC assembly plant and a research and development center.

Scissors said Trump's tariff plan on semiconductor imports has created a tremendous amount of uncertainty, including how long an exemption would continue, and he argued that the uncertainty itself has a deterrent effect.

"It makes it harder to think about exporting to the U.S. It also encourages companies to make announcements about investments and then not necessarily make the investment," Scissors said.

In April, Trump unveiled sweeping blanket tariffs on the U.S.' trading partners including 32 percent faced by Taiwan but allowed negotiations for a lower levy.

On July 31, the White House announced Taiwan's tariff was cut to 20 percent, effective on Thursday, which is still higher than 15 percent imposed on Japan and South Korea, two of the major competitors of Taiwan.

Scissors said whether Taiwan is losing its competitiveness depends on products.

"If you're the only company making the product, then you can raise prices. If you have a lot of competitors, then you can't," Scissors said.

● Taiwan says impact of proposed U.S. chip tariff still unclear

In addition, Scissors said there was not a large gap between 15 percent and 20 percent in tariffs so "the competitive disadvantage of Taiwanese firms is actually quite small."

Taiwan's government said the 20 percent was "provisional" and further negotiations will be held with the U.S. to push it lower, and Scissors said Taiwan could promise a large amount of investment to bring the tariff down to 15 percent.

But "I don't know if it's worth it," Scissors said.