Trump Threatens 100% Tax on TSMC for Lack of U.S. Plant

Former U.S. President Donald Trump has issued a stern warning to Taiwan Semiconductor Manufacturing Company (TSMC), stating that the company would face a 100% tax if it does not establish a manufacturing plant in the United States. This threat was made during a recent event where Trump criticized the current administration for providing TSMC with a $6.6 billion subsidy for its semiconductor factory in Arizona. Trump emphasized that his approach would involve imposing heavy taxes rather than offering financial incentives.

In March, TSMC announced plans to invest an additional $100 billion in the United States over the next four years, aiming to increase its chip production capacity. This investment, which TSMC has touted as the largest single foreign investment in U.S. history, brings the company's total investment in the U.S. to $165 billion. TSMC's CEO, C.C. Wei, announced during a White House press conference that the funds would be used to build three new wafer fabrication plants, two advanced packaging facilities, and one research and development center in the U.S.

Throughout his presidential campaign and tenure, Trump has repeatedly threatened to impose tariffs on imported semiconductors. In February, he threatened to impose tariffs of 25% or higher on semiconductor equipment and other imported goods, with the tariff rates set to increase significantly over the course of a year. Analysts have suggested that TSMC's recent announcement of a substantial investment in the U.S. was a strategic move to appease Trump and avoid potential tariffs on semiconductors.

Trump's remarks underscore the strategic importance of semiconductor manufacturing to national security and economic competitiveness. The semiconductor industry is a critical component of modern technology, powering everything from smartphones to advanced military systems. As such, governments around the world are increasingly focused on securing their own semiconductor supply chains and reducing dependence on foreign manufacturers. Trump's approach of using tax threats to encourage domestic investment in the semiconductor industry reflects this broader trend.

However, the effectiveness of Trump's strategy remains to be seen. While his approach may encourage some companies to invest in the U.S., it could also have unintended consequences, such as driving up the cost of semiconductors for American consumers and businesses. Additionally, the threat of heavy taxes could deter other foreign companies from investing in the U.S., potentially harming the country's long-term economic prospects. As the semiconductor industry continues to evolve, it will be important for policymakers to strike a balance between encouraging domestic investment and promoting a competitive and innovative global market.