Many of today’s chips used in smartphones, tablets, and laptops are overseas. TSMC, the world’s largest semiconductor manufacturer, operates mainly in Taiwan and China. However, US President Donald Trump has said he plans to introduce higher tariffs to discourage companies from relying on imported chips.
Higher tariffs incoming
It is no secret that Trump wants to introduce tariffs for imported goods to protect the local US manufacturing scene. However, the tariffs on these imports could be much higher than we had previously thought.
During a House GOP Issues Conference speech, Trump said he wants tariff rates “much bigger” than 2.5%. Incoming Treasury Secretary Scott Bessent had previously suggested a starting global rate of 2.5%, but Trump thinks it should be set much higher than that.
According to Trump, “As tariffs on other countries go up, taxes on American workers and businesses will come down and massive numbers of jobs and factories will come home. Remember, again, the word ‘tariff.’ We’re going to protect our people and our businesses, and we’re going to protect our country, with tariffs.”
Trump hasn’t set the exact figures yet. However, TechCrunch cites a CTA report from 2024 that suggested possible figures. This could result in prices of laptops and tablets going up by 46%. It could also affect game consoles prices by 40% and smartphones by 26%.
Encouraging local manufacturing
It is clear that Trump is threatening higher tariffs to encourage companies to start building more of its products back home in the US. His approach also appears to be more stick than carrot. This is the opposite of what former US President Joe Biden was hoping to achieve with the CHIPS Act.
For those unfamiliar, the CHIPS Act authorized $280 billion in funding to boost domestic research and the manufacturing of semiconductors. It would also act as an incentive for companies to bring more operations back to the US.
Trump’s approach is hoping to achieve a similar outcome, but using a different and more “punishing” method. This move could affect many US tech giants negatively. Companies like Apple rely heavily on imported technology.
Apple is one of TSMC’s biggest customers for the A- and M-series of chipsets used in its smartphones, tablets, and computers. Even Tesla, owned by Trump adviser Elon Musk, imports some of its components from China.
However, it had previously been suggested that companies such as Apple and Tesla could be exempt from these higher tariffs due to their close relationships with Trump.
