Trump's Semiconductor Tariffs Loom: Experts Warn of "Dam Theory" Impact in Taiwan

Could New US Tariffs Unleash a Flood of Disruption in Taiwan's Semiconductor Industry?

As the White House delays tariffs on electronic products like laptops and smartphones destined for the US market, the semiconductor industry in Taiwan braces for impact. US President Donald Trump has signaled upcoming details regarding new semiconductor tariffs within the next week, causing significant concern among chip manufacturers.

Liu Peichen, Director of the Taiwan Institute of Economic Research's Industrial Economic Database, issued a warning on the 14th. She fears that if the US imposes high tariffs on companies like Taiwan Semiconductor Manufacturing Company (TSMC), the undesirable "Dam Theory" could materialize. This scenario describes a situation where, once the floodgates open, a massive surge of disruption overwhelms downstream suppliers, potentially distorting the entire semiconductor supply chain.

This comes as a seeming reversal. After the initial exemption of tariffs on tech products, which provided temporary relief to tech giants like TSMC and Apple, why is Trump now turning his attention to semiconductors with his tariff plans? Industry analysts suggest that Trump's strategy may be twofold: First, to encourage more semiconductor companies to invest in the United States, and second, to incentivize companies that have already announced US investment plans to expedite and expand their projects.