Taiwanese Economics Ministry Officials in Washington to Discuss Semiconductor Tariff Threats
TSMC’s Arizona Advanced Semiconductor Factory (Photo: TSMC/IEEE Spectrum)
Taiwanese Economics Minister Kuo Jyh-huei states that officials from his ministry have been in Washington since Tuesday on a “routine visit” to U.S. President Donald Trump following his Jan. 27 threats of a “25, 50 or even 100 percent” tariff on semiconductors.
Semiconductor chips are essential for the function of thousands of electronic products such as computers, smartphones, medical equipment, and satellites, meaning their production holds immense influence. In fact, in 2024, semiconductor chips ranked as the world’s fourth most traded commodity. Taiwan itself holds 21% of global semiconductor manufacturing capacity, and 92% capacity for the most advanced chips—what some of the most advanced AI systems require. Additionally, Taiwan supports a complex research & development process, “fostering collaboration between industry and academia,” which further strengthens its production capacity.
Taiwan Semiconductor Manufacturing Co. (TSMC) is the company responsible for a significant portion of the creation of these chips, and prior to President Trump’s election had established an operational plant in Arizona manufacturing chips. Despite the Arizona plant’s efficiency, the chips produced there are not the most advanced, although there are plans—agreed to under former President Biden—to begin production of those at a new plant in 2028. In fact, TSMC and Biden agreed upon a $65 billion investment in a third plant, subsidized partially by the U.S. (up to $11.6bn in financing) as part of the 2022 CHIPS Act to bolster U.S. chipmaking.
President Trump’s announcement was a shock to the aforementioned TSMC plans as he threatened to “tax imported semiconductors” and stop financing plans in order to “return production of these essential goods to the U.S.” Instead of bolstering the development of the factory with financial rewards, on Jan. 27, in a speech to House Republicans, President Trump promoted a different approach, arguing that “they don’t need money, they need 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.”
The implications are significant for Taiwan, with its economy so reliant on semiconductor manufacturing and its security inherently bolstered by their critical importance to the global supply chain. Moving these advanced semiconductor plants to the United States would be incredibly complicated, with over 500 factors contributing to decision-making in semiconductor factory building. The process would not only dismantle the Taiwanese economy but also the global semiconductor industry—one which consumers remember being nebulously impacted by the global chip shortage of 2020. Furthermore, Taiwan’s security regarding cross-strait tensions with China is reliant upon U.S. support for a number of reasons. Its semiconductor production capacity is invaluable to all, including China. Additionally, the U.S. provides nearly all of the island’s major weapons and critical political support.
This “routine visit” by Taiwanese officials to Washington is seemingly to mitigate this aforementioned crisis. Taiwan must address issues of semiconductor manufacturing as well as security, ensuring that the “strong partnership,” committed in U.S. law, remains intact. Some reassurance for Taiwanese leaders about President Trump’s commitment to military partnership came following the Feb. 7 joint statement between President Trump and Japanese Prime Minister Ishiba Shigeru in which they “emphasized the importance of maintaining peace and stability across the Taiwan Strait as an indispensable element of security and prosperity for the international community” and opposed any actions taken against Taiwan “made not only by force, but by coercion.” This statement about coercion, seemingly a first, references Chinese nonmilitary actions taken against Taiwan.
President Trump and Japanese Prime Minister Ishiba Shigeru at the White House on Feb 7, 2025 (Photo: AP/Alex Brandon/the Washington Times)
Regarding the U.S.-China-Taiwan dynamic, President Trump has indicated that he spoke with President Xi Jinping after the inauguration, although President Xi’s office has not confirmed it. Details of the call have not been revealed. Yet regardless, Taiwan will play a significant role in U.S.-China discussions, with President Xi surely pressuring President Trump to “soften Washington’s stance on Taiwan” as a component of any deal, especially in regards to tariffs.
These components—semiconductor manufacturing as economy and U.S. military and political assurance as security—are foremost in any Taiwanese discussions this week in Washington.