Taiwan faces growing pressure from US over chips, tariffs
Although Taiwan is home to the world’s leading semiconductor capabilities—supplying essential chips for global supply chains, including those in the US—Trump is insisting that half of this production be moved to American facilities. Taipei has resisted, even as it faces 20% tariffs on its goods entering the US.
Trump has also reassured the public that Chinese President Xi Jinping will not resort to force in the Taiwan Strait. Their recent meeting in South Korea, the first since 2019, did not include a discussion on Taiwan, according to Trump.
Analysts told reports that multiple fronts—technology, trade and security—are converging into one of Taiwan’s most challenging periods in its relationship with Washington.
“Taiwan sits on the chessboard of US-China competition,” said Shun-wen Wang of National University of Kaohsiung. “There is little room for hedging.”
In Taiwan, many view Trump’s semiconductor demands as both unrealistic and potentially harmful.
“Taiwan’s strength lies in high technology,” said Chien-Yu Shih of the Institute for National Defense and Security Research. Shih noted that complying with the plan “will not be acceptable to Taiwan’s authorities,” even though Taipei remains reliant on the US for its security.
Shih explained that Taiwan is not outright rejecting the proposal, but much of it is simply not feasible.
“Taiwan possesses a complete semiconductor manufacturing ecosystem, whereas the US lacks such an industrial chain and cannot easily relocate,” he said, adding that American labor cannot immediately fill the high-tech roles required. Even with accelerated investment, he argued, the process of shifting advanced manufacturing chains could stretch beyond a decade.
“The US currently lacks the necessary high-tech workforce and supporting infrastructure to accommodate such a shift,” he said.
TSMC has committed tens of billions of dollars to its Arizona facilities, which are still under construction, but these plants will not surpass the technological level of its operations in Taiwan.
Taiwan is also navigating the impact of Washington’s new tariff regime. While Trump ultimately applied a 20% rate—lower than the earlier threat of 32%—the figure remains significantly above the 15% imposed on imports from other US allies such as South Korea and Japan. Taiwan’s leader William Lai Ching-te previously described the new tariffs as temporary and expressed hope they could be renegotiated.
Shih told reports that the tariff issue has not fundamentally altered political or security ties, but certain export-reliant industries are likely to feel pressure.
“Industries such as bicycles, textiles, and machine tools may be substantially affected,” he said, warning that economic costs could trigger public dissatisfaction.
Defense spending is another major point of contention. Trump expects Taiwan to raise military expenditures to levels nearing 10% of its nearly $884 billion GDP—far beyond what Taiwan currently dedicates. The administration has proposed an increase to roughly 3% next year, around $31.1 billion, but Shih expects this number to continue rising.
“Taiwan’s defense budget will soon rise to 5% of GDP or more,” he said. He added that while this has little to do with tariff disputes, it aligns with Washington’s long-standing expectations.
During Trump’s previous term, Washington approved around $18 billion in weapons sales for Taiwan.
The Trump administration is pursuing a trade agreement with China, even while imposing tariffs on close partners. Analysts note that these mixed signals undermine confidence.
“The larger issue is trust,” said Einar Tangen, a Beijing-based expert. “Donald Trump is not perceived as trustworthy, and neither are current elites in Washington.”
Shih emphasized that tensions between the US and China are now “structural,” with both sides locked into a competition they are unwilling to de-escalate. Taiwan, he noted, does not want to become leverage in negotiations.
Wang said Taiwan’s strategic flexibility is extremely limited.
“Given Taiwan’s strategically important position and its need for security assurance, it does not have many options but to stand together with its strategic allies,” he said.
Ali Wyne of the International Crisis Group told reports that Trump has “evinced little concern for Taiwan’s security,” adding that Trump appears focused on a narrow deal aimed at normalizing trade with Beijing. Xi, by contrast, “seems interested in a more expansive deal that would entail security concessions from the US,” he said.
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