Key takeaways:

• Taiwan's government is assessing the need for support for its semiconductor industry following Donald Trump's tariff threats.
• Trump plans to impose tariffs of up to 100% on semiconductor imports to incentivize production relocation to the U.S.
• The semiconductor sector is crucial for Taiwan, which hosts TSMC, the world's largest contract chipmaker.
• Both Taiwanese and U.S. officials emphasize the mutual dependency of their technology industries amidst escalating tensions.
• Economic experts warn that excessive tariffs could harm both Taiwan and U.S. tech firms and provoke a trade war.

Taiwan's government, spearheaded by Premier Cho Jung-tai, is considering various methods to bolster its semiconductor industry after former President Donald Trump threatened to impose steep tariffs on imported chips. According to reports, Trump plans tariffs that could reach as high as 100% on certain goods, targeting Taiwan prominently due to its substantial role in the global chip supply chain. The island, home to Taiwan Semiconductor Manufacturing Company (TSMC), produces approximately 60% of the world’s semiconductors and over 90% of the most advanced chips used in technologies like artificial intelligence, which are crucial for U.S. competitiveness, especially against China.

Cho indicated that the Taiwanese government is actively monitoring developments and is poised to hold emergency discussions about support measures within a few days. During the celebration of the Lunar New Year, he assured the public that Taiwan’s position as a leader in the industry remains vital, stating, “In a day or two, we will urgently examine whether we should offer more cooperation plans and assistance to the industry.” Source.

Trump’s proposed tariffs, referenced in a recent address, aim to encourage the return of semiconductor production to the U.S. The statement included concerns that the current production is largely based in Taiwan, where it has developed a significant hub for semiconductor manufacturing. TSMC has already committed to building factories in Arizona with an investment totaling $65 billion, exemplifying the U.S. efforts to secure domestic semiconductor supply chains amidst increasing global competition. According to CNN, Taiwanese officials believe that the tariffs may not significantly impact their chip exports, thanks to their technological superiority.

However, economic experts caution that if such tariffs are implemented, they could trigger unintended consequences including rising costs for consumers and a potential trade war that would disrupt relations between Taiwan and the U.S. Additionally, with Taiwan exporting a record $111.4 billion in high-tech products to the United States over the past year, the tariff threats could shake the foundations of this prosperous bilateral trade relationship. As noted by Newsweek, some analysts fear that declaring high tariffs could prompt Taiwanese companies to relocate their manufacturing capabilities to countries with less stringent tax impositions.

In summary, as tensions heighten around semiconductor tariffs, both Taiwanese and U.S. officials stress the importance of collaborative efforts to ensure stability in the tech sector and maintain Taiwan's significant role within the global semiconductor supply chain.

For further details, read the full article from South China Morning Post.