Taiwan and Japan Push Back Against Trump's Tariff Attacks on Semiconductor and Steel Industries

Taiwan's TSMC and Japan's Steel Industry Seek Protection Amid Rising Trade Tensions with the U.S.

As former President Donald Trump's administration introduces new tariffs on key industries, both Taiwan and Japan have launched strategic measures to safeguard their semiconductor and steel sectors. Taiwan’s semiconductor powerhouse, TSMC, and Japan's steel industry are intensifying efforts to navigate these growing trade challenges, which could significantly affect their economies and industries.

In a major move, Trump’s administration recently announced the implementation of additional tariffs, including a 25% tariff on steel products and a threat to impose new tariffs targeting the semiconductor sector. Taiwan, home to the world's largest semiconductor foundry, Taiwan Semiconductor Manufacturing Company (TSMC), has been particularly proactive in responding to the escalating trade war. These tariffs have the potential to disrupt global semiconductor supply chains, with Taiwan's economy being heavily reliant on TSMC's production and export.

TSMC and Taiwan’s Strategic Trade Response

In light of Trump's new tariff proposals, Taiwan’s government has ramped up efforts to protect its vital semiconductor industry, with TSMC at the forefront of these measures. TSMC, often referred to as the "father of Taiwan’s semiconductor industry," has already braced for impact, having anticipated such trade disruptions. Morris Chang, the founder of TSMC, famously warned company employees about the strategic importance of semiconductors in the growing geopolitical landscape just before the U.S. election.

To prepare for possible new tariffs on semiconductors, Taiwan's government, through the Ministry of Economic Affairs, has engaged in high-level talks with U.S. officials. In January, Taiwan signed an economic and trade cooperation memorandum with the U.S. Department of Commerce in Florida. This agreement was an early attempt to forge closer ties with the U.S. to mitigate the fallout from the new tariffs. A special delegation led by Cynthia Kyang, head of the International Trade Bureau, arrived in Washington, D.C., to engage with U.S. trade representatives and explore ways to shield Taiwanese semiconductor companies from the new tariffs.

The delegation’s mission involves negotiating with U.S. officials to safeguard TSMC’s investments in the U.S. and prevent the cancellation of U.S.-bound semiconductor manufacturing incentives. As part of their diplomatic push, Taiwan is also exploring trade solutions, such as increasing the import of U.S. energy products, to help offset the trade imbalance with the U.S., which stood at $74 billion in 2024.

TSMC, ever conscious of the economic and strategic significance of its operations, responded by holding its board meeting in Arizona, U.S., a first in the company’s history. This move signals TSMC’s commitment to its U.S. operations and further investment in local manufacturing capabilities, signaling a determination to navigate the growing trade tensions. Given that the U.S. government, under the Biden administration, has promised substantial subsidies for semiconductor research and manufacturing, TSMC's actions underline its willingness to prioritize its U.S. expansion amid these threats.

Japan's Steel Industry Reacts to U.S. Tariffs

Japan, another critical player in the global trade of steel products, is also responding swiftly to Trump's tariff proposals. Following a recent U.S.-Japan summit, Japan's government expressed concern over the U.S. plan to impose additional tariffs on steel and aluminum. The Japanese government has formally requested that Japan’s steel exports be exempted from these new tariffs. This request was formally submitted to the U.S. government through the Japanese Embassy in Washington, D.C.

In the event that these tariffs are enacted, Japan has prepared an alternative measure to support its steel industry: the implementation of trade insurance through the Japan Trade Insurance Corporation (NEXI). This insurance would cover the additional tariff burden, ensuring that Japanese steel manufacturers maintain their competitive pricing in the U.S. market, despite the tariff-induced cost increase.

Japan’s steel sector plays a crucial role in its economy, and any disruption in steel exports to the U.S. could have far-reaching consequences for both the Japanese economy and its industrial competitiveness. By using trade insurance, Japan aims to mitigate the financial impacts of U.S. tariffs while maintaining the global competitiveness of its steel industry.

Global Implications of Rising U.S. Tariffs on Semiconductor and Steel Industries

The ongoing tariff battles between the U.S., Taiwan, and Japan highlight the growing importance of strategic industries like semiconductors and steel in global trade. For Taiwan, the semiconductor sector is the backbone of its economy, with TSMC playing a crucial role in the international supply chain for high-tech products. As the world’s largest semiconductor manufacturer, TSMC is vital not only for Taiwan’s economic health but also for global tech giants relying on its products.

Similarly, Japan’s steel industry remains a key component of global infrastructure and manufacturing. With the U.S. being one of Japan's largest steel export markets, any new tariff could undermine Japan’s trade relations with the U.S. and disrupt the stability of the steel market.

Both nations are working tirelessly to minimize the impacts of these tariffs and maintain strong trade ties with the U.S., an effort that is essential for the continued growth of their respective industries. As both Taiwan and Japan implement strategic countermeasures to protect their industries, the global trade landscape will continue to evolve, with these actions potentially shaping future diplomatic and economic negotiations between the U.S. and its allies in Asia.

In conclusion, the latest trade challenges faced by Taiwan and Japan underscore the importance of the semiconductor and steel sectors not only for these countries but also for the broader global economy. Both nations are taking significant steps to protect their industries, demonstrating their commitment to navigating the shifting tides of global trade and ensuring their economic stability in the face of mounting tariffs.