Thursday, April 3rd 2025
US Exempts Semiconductors From Taiwan Tariffs, But Chip-Making Equipment Remains on the List
Yesterday, United States President Donald Trump announced a set of tariffs imposed on US trading partners, imposing a series of 10%+ tariffs on partners, calling it a "Liberation Day." Today, we are calculating how much these tariffs will impact consumers and what is most important at TechPowerUp: semiconductors powering our GPUs and CPUs. According to one of the top investment banks, Goldman Sachs, semiconductors are exempt from the reciprocal tariffs that Trump has imposed on Taiwan. However, the semiconductor manufacturing equipment used by makers like TSMC is not exempt and is expected to be hit with the 32% tariffs. This is only half of what Taiwan imposes on imports of US-made goods. For TSMC, the number one maker of GPUs and CPUs, tariffs can be tricky to navigate. While its existing manufacturing facilities use equipment sourced from Dutch ASML and a few US companies like Lam Research and KLA Corporation, it shouldn't be a problem to ship new silicon to the US.
However, if TSMC wants to expand its manufacturing facilities in any country that is not the US, it will have to deal with 32% tariffs on US-sourced silicon manufacturing equipment. For EU-based ASML, things are looking a little different. If over 20% of the equipment is made up of US content, a tariff exemption might apply, potentially reducing import costs. If more than one-fifth of a product's components or value originates from US sources, the equipment may be eligible for tariff relief. ASML's machines include some US components, so determining whether these machines meet the 20% threshold is crucial. If they do, the tariff exemption could help lower costs associated with importing these advanced machines, reaching up to $380 million. For non-US-injected goods, EU entities are subject to 20% tariffs.
Source:
via Jaukanlosreve on X
However, if TSMC wants to expand its manufacturing facilities in any country that is not the US, it will have to deal with 32% tariffs on US-sourced silicon manufacturing equipment. For EU-based ASML, things are looking a little different. If over 20% of the equipment is made up of US content, a tariff exemption might apply, potentially reducing import costs. If more than one-fifth of a product's components or value originates from US sources, the equipment may be eligible for tariff relief. ASML's machines include some US components, so determining whether these machines meet the 20% threshold is crucial. If they do, the tariff exemption could help lower costs associated with importing these advanced machines, reaching up to $380 million. For non-US-injected goods, EU entities are subject to 20% tariffs.
21 Comments on US Exempts Semiconductors From Taiwan Tariffs, But Chip-Making Equipment Remains on the List
For example, in USA a video card that is sold at 1000$, in Europe you can buy it at the equivalent of 1500$, after all those nasty taxes, VAT, import tariffs, etc.
Now is time for the US to also feel the pain, like the rest of the world. :)
America needs homes and jobs, not cheap chinese crap.
Way too many countries take the U.S tariffs for granted, South-Africa being one of them, they were part of AGOA, which means, no tariffs for their goods to the U.S, nothing, zero, zip, but at the same time has a 60% tariffs for U.S goods being sold in South-Africa, the hypocrisy of so many countries lol
Edit: So I looked a bit and it seems the alleged Taiwan tariff % is completely bogus. The Trump admin took trade deficit numbers and claimed those are tariffs that USA must pay. Like, what the hell? Is it drugs?Wait, the tariffs are charged on imports into USA. Are you sure you don't have it backwards? Does Trump try to charge tariffs for exports? That is something that would actually hurt US economy since the chipmaking equipment would become less competitive in global market. If they are really doing this, it sounds more like soft sanctions that aim to limit chipmaking outside of USA. There will be a risk that this opens the global chipmaking market to chinese tool makers.
However, I think the article is simply wrong, the source it quotes does state these are actually import tariffs, which will be charged on foreign equipment bought by american companies that will try to build a chip fab in USA. Which is brilliant - you want to support domestic chip production, but you also make it much more expensive to build the fabs in your country. Well, turns out it's not just the electorate that often misunderstands what tariffs do, the GOP administration is in the same boat :DYou are aware that US also charges sales tax (analogue of VAT)? It's just variable by state, so it is not included in listed $$$ prices.
What's even more pointless is that TSMC invested in factories in America because of tariff intimidation, as it turns out now, it wasn't necessary. When they could have spent that money on technological innovation.
Also, in these times, you can buy a company without even founding a new company and building a factory in the country, so those tariffs only bring stupid populism to dreamers. But the end result is rising prices for everyone.
The issue is that most people only conceive of this subject through the lens of money, that tariffs will incentivize domestic production by artificially making costs lower domestically, but the other tantamount part of this equation are labor laws and the exploitability of the local labor force. While America has nowhere near the labor protections of Europe, they're still more robust than most countries currently at the core of global consumer good production. You can even see this on a national scale within America where moat .of the newer manufacturing facilities are headquarter in the states with the least amount of labor protections.
The tariffs will cause inflation in USA so ironically production costs in US may actually go up through indirect effects.
Tariffs are used to protect domestic industries in developing nations so that they can eventually gain the expertise, knowledge, logistics, and capital required to compete on the global stage and so that the domestic market isn't just taken over by international companies with severe advantages over domestic ones.
It's incredibly normal for these developing nations to have high tariffs, because if they didn't international companies swoop into starting or maybe not even started markets and take control of them. Heck some African countries are still weaning themselves off France to this day.
Likewise, it's also incredibly normal for tariffs to be low on goods coming from developing countries. This enables the creation of cheap goods for 1st world countries while also creating an economic ladder for developing countries to climb. It's no detriment to service based economies like the US either. You are trading low value manufacturing jobs for higher value service jobs. 98% of jobs in service based economies like the US, UK, etc are service based.
There will be no long term gain from attempting to bring back manufacturing jobs because by the time the industry could even feasibly build back it will almost certainly be extremely automated. Most of that money would not flow into the pockets of ordinary americans.This is grossly false:
USMCA:
Automobiles & Auto Parts - 0% Tariff if 75% of parts originate from North America (up from 62.5% under NAFTA). Mexico eliminates 10% tariff on U.S. auto exports.
Dairy - eliminates 200-300% tariffs on U.S. dairy products, allowing up to 3.6% of its dairy market to U.S. suppliers.
Poultry & Eggs - U.S. can export 57,000 metric tons of chicken to Canada tariff-free (rising to 62,000 by 2026).
Egg exports - 10 million dozen tariff-free, increasing by 1% annually.
Wheat - Canada removes higher-grading advantage for domestic wheat over U.S. wheat.
0% tariffs on digital products (e-books, music, videos, cloud services). This one is massive given the number of services US provides worldwide from Google, Apple, Adobe, etc.
KORUS (United States-Korea Free Trade Agreement)
Automobiles - South Korea eliminated 8% tariff on U.S. car imports. U.S. maintains 2.5% tariff on Korean car imports until 2041.
Beef - Tariff phased down from 40% (2012) to 16% (2023), with complete elimination by 2026.
Pork - Most U.S. pork cuts 0% tariff since 2016.
Wine - South Korea removed 15% tariff on U.S. wine.
Cheese & Dairy - 36% tariff phased out over 15 years.
Medical Devices & Pharmaceuticals - 0% tariff on U.S. medical equipment and drugs.
CAFTA-DR (Central America-Dominican Republic Free Trade Agreement)
Apparel & Textiles - 0% tariffs on U.S. yarns & fabrics used in Central American-made apparel.
Wheat, Corn, Rice - Tariffs phased out completely by 2020.
Pork - 15% tariff eliminated by 2020.
Dairy - 40% tariffs on cheese and milk phased out over 20 years.
Wine & Spirits - 15-30% tariffs eliminated immediately.
Electrical machinery, equipment, and medical devices now tariff-free.
- WTO's CAA stipulates that aircraft and aircraft parts be tariff and duty free
Automobiles & Auto Parts – Duty-free if they meet regional content rules (75% of components from North America).
There's a lot more too, these are just some examples.
Who knows how long these will stick around though given the US is in clear violation of the agreements it's signed.
Spitting in the face of deals you made (particularly given that the Trump admin signed the current USMCA) makes you untrustworthy. If the US felt it was getting a raw deal there were diplomatic channels built into those agreements for them. This administration didn't even bother with those. By extension this trade dispute isn't in good faith, it has nothing to do with the US getting a claimed raw deal.The US lacks the expertise, skill, and logistics networks to bring these jobs back and it would take years to build them up again. Typically, you'd want to pair tariffs with massive domestic investments to push rapid development but we've seen quite the opposite in the curtailing of domestic spending.
In addition, there's also the question of whether producing many of the tariffed products even makes sense economically. The only way I see it being viable is via full automation. The cost of labor in the US is just to high to be competitive and honestly the US doesn't need those low value jobs. What they need to do is stop the concentration of wealth that allows those at the top to exploit everyone else as that has been the center of every woe average Americans face.
Fully-automated luxury communism isn't for me, so I'll respectfully disagree.
Communism has nothing to do with anything mentioned.
before, the right-hand column would have been zeros mostly.
(Edit: I saw WTO numbers now - real tariffs charged for US goods are 2 % for Taiwan and 2.9 % for Vietnam. Go figure how much truth is in the rest of what these clowns claim.)