Taiwan’s Tech Giant Pushes Back Against U.S. Tariff Threat

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, has issued a sharp warning to the U.S. government, cautioning that proposed tariffs on Taiwanese semiconductor imports could derail its massive $165 billion investment plan in Arizona. In a letter to the U.S. Commerce Department, TSMC said such trade measures would hurt demand, inflate costs, and threaten America’s tech leadership.

TSMC’s Billion-Dollar Bet on U.S. Soil

TSMC’s Arizona project is a cornerstone of the U.S. strategy to localize semiconductor production and reduce dependence on Asian supply chains. The company has already invested $65 billion in three advanced fabrication facilities ("fabs") in Phoenix. The first fab has begun production, the second is nearly complete, and construction on the third has just begun.

In March 2025, TSMC committed an additional $100 billion, planning three more fabs, two packaging and testing facilities, and a dedicated R&D center. Once operational, the Arizona cluster will produce 100,000 wafers per month, contributing roughly 30% of TSMC’s global 2nm and advanced chip output.

Trump’s Tariff Threats and “Chip Theft” Claim

U.S. President Donald Trump, currently running for re-election, has threatened to slap up to 100% tariffs on semiconductors from Taiwan. He accused Taipei of "stealing" the chip industry from the United States, arguing that U.S. manufacturing dominance was lost to overseas players like TSMC due to unfair trade practices.

This aggressive stance, part of a broader push for economic nationalism, aims to bring semiconductor production back to the U.S. But critics argue that such tariffs may hurt American consumers and undermine the very investments aimed at rebuilding domestic tech strength.

TSMC’s Warning: Tariffs Could Backfire on U.S. Tech

In its letter, TSMC warned that higher import duties would:

·       Raise costs for U.S. companies and consumers, reducing demand for electronics that rely on semiconductors.

·       Undermine confidence in U.S. industrial policy, especially among foreign investors.

·       Jeopardize long-term projects, such as the Arizona cluster, due to increased financial uncertainty.

The company emphasized that its commitment was based on the assumption of stable, demand-driven growth. Disruptive tariffs could reverse that trajectory.

TSMC specifically asked that any new trade actions exclude semi-finished or end products that contain semiconductors, arguing that such measures would unintentionally punish downstream industries—from smartphones and laptops to cars and defense systems.

Economic Nationalism vs. Global Supply Chains

Trump’s proposed tariff strategy is part of a wider trend of economic decoupling from China and other Asian manufacturing hubs. While the goal is to secure supply chains and protect U.S. jobs, the global nature of chip manufacturing means that even American-made products often rely on foreign inputs.

If TSMC’s Arizona operations are derailed, it would not only hurt U.S. tech competitiveness but also risk delays in AI development, defense systems, and consumer electronics production—all of which depend on advanced chips.

Tariffs Could Undermine U.S. Tech Revival

TSMC’s blunt warning should serve as a reality check. While bringing manufacturing back to the U.S. is a worthy goal, the path must be strategic—not punitive. Blanket tariffs on key allies like Taiwan risk sabotaging American innovation and alienating partners who are vital to the global chip ecosystem.

If the U.S. wants to lead the future of technology, it must create an environment where innovation thrives—not where political rhetoric chokes investment.

(With agency inputs)