TSMC Exempt From Trump's 100% Chip Tariffs Due to U.S. Investments

Taiwan Semiconductor Manufacturing Company (TSMC) appears to be exempt from U.S. President Donald Trump’s proposed 100% tariffs on semiconductor imports, according to statements from the Taiwan National Development Council on August 7, 2025. The exemption was attributed to TSMC’s existing U.S. manufacturing and research facilities, which the administration has excluded from the sweeping tariff measures [1]. As the world's largest contract chipmaker, TSMC supplies critical components for global tech leaders including Apple and Nvidia.

Trump has made tariffs a central pillar of his economic policy, particularly in his second term, with the stated goals of reducing the U.S. trade deficit and boosting domestic manufacturing. The president has imposed or announced a series of “reciprocal” tariffs affecting nearly 200 countries, with rates varying from 25% to 50% in certain cases [2]. For instance, a 25% tariff on Indian oil imports was justified as a response to India’s support for Russia’s military actions. Additionally, imports valued under $800—previously tariff-free—are now subject to levies as of August 29, 2025 [3].

However, the exemption for TSMC underscores a more nuanced, pragmatic approach in the administration’s tariff strategy. Trump has indicated that companies that are either building or have committed to building in the U.S. will not be charged under the new measures. TSMC’s decision to invest an additional $100 billion in U.S. facilities has positioned it as a key player in Trump’s vision of localizing high-tech production. This exemption may also serve as an incentive for other global manufacturers to consider expanding their U.S. operations [1].

Taiwan has long been a global leader in semiconductor manufacturing, producing more than half of the world’s chips and nearly all high-end variants. The country has made several concessions to avoid additional tariffs, including pledges to increase U.S. energy purchases, boost defense spending to over 3% of GDP, and expand U.S. investments. These efforts were part of broader negotiations between U.S. and Taiwanese officials to avoid economic conflict [1].

Analysts note that the exemption for TSMC could create a new dynamic in global chip manufacturing. While it provides immediate relief to the company, it may also lead to market distortions for firms without a U.S. presence. TSMC’s exemption may encourage other manufacturers to follow suit, although not all may be able to replicate the scale or commitment of its U.S. operations. At the same time, the continued escalation of tariffs on other sectors, including a potential 250% levy on pharmaceutical imports, suggests that Trump’s trade policy remains highly aggressive and unpredictable [2].

The news also highlights the complex interplay between trade policy and strategic industrial interests. Despite Trump’s frequent criticism of Taiwan for allegedly undermining the U.S. chip industry, the administration has opted to protect TSMC through this tariff exemption. This reflects a broader recognition of the company’s strategic importance in the global supply chain and its role in supporting U.S. manufacturing ambitions.

While TSMC benefits from this reprieve, the broader impact of Trump’s tariff strategy on global trade and industry remains uncertain. The administration has yet to provide a clear timetable for implementing the 100% chip tariff, and it remains to be seen whether similar exemptions will be granted to other key players in the semiconductor sector. For now, TSMC’s exemption serves as a clear signal of the administration’s willingness to balance protectionist rhetoric with practical economic considerations [1].

Source:

[1] TSMC gets a reprieve from Trump's 100% chip tariffs (https://fortune.com/asia/2025/08/07/tsmc-exempt-trump-chip-tariffs-taiwan/)

[2] Trump tariffs live updates: Trump says pharma tariffs could go (https://finance.yahoo.com/news/live/trump-tariffs-live-updates-trump-says-pharma-tariffs-could-go-to-250-us-tensions-with-india-escalate-200619881.html)

[3] Tariffs in the second Trump administration (https://en.wikipedia.org/wiki/Tariffs_in_the_second_Trump_administration)