Trump's ultimatum to Taiwan: 15% tariff only if TSMC buys 49% stake in Intel and invests $400 billion in US

Taiwan-US tariff latest updates: Taiwan faces a high-stakes dilemma in its trade negotiations with the United States, as US president Donald Trump reportedly set tough conditions, if the island nation wants to achieve the same 15% tariff as Japan and South Korea, the semiconductor giant TSMC must acquire a 49% stake in Intel and invests an additional $400 billion in the US, as reported by Mnews.

Taiwan-US Trade Tensions Escalate Over Tariffs

The proposed 20% tariff has left Taiwan’s exporters reeling, but the reciprocal tariff figure was not surprising, as Taiwan's trade deficit with the US last year was higher than that of Japan and South Korea, according to Mnews.

Taiwanese Exporters Reel from 20% Tariff Proposal

A senior executive at a major Taiwanese conglomerate, pointed out that, "After all this time, it's still higher than Japan and South Korea, and even higher than the 19% tariffs in Thailand and Indonesia. This is truly dismal. Besides the 5% increase in tariffs, the exchange rate has recently appreciated by 10%, resulting in a 15% gap. Taiwan's industries will be very hard hit," as quoted in the report.


Chairman of the Taiwan Chamber of Commerce, Hsu Shu-po, explained that, "Although the 20% increase is temporary, subsequent adjustments will depend on what leverage Taiwan has in negotiations with the US. A 5% difference is hugely damaging," as quoted by Mnews.

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Trade Deficit Pressures Taiwan to Make Concessions

The 20% tariff comes as last year Taiwan’s trade deficit with the United States reached $73.9 billion, surpassing Japan’s $68.5 billion and South Korea’s $66 billion, placing added pressure on the island’s government to make concessions, according to the report.

Donald Trump’s Conditions: TSMC Must Buy 49% of Intel and Invest $400 Billion in US

Mnews' investigation found that the biggest obstacle in the current negotiations between Taiwan and the United States depends on TSMC, as a tech industry veteran highlighted that, "From the beginning, semiconductors, and especially TSMC, have been Trump's top priority!" as quoted by Mnews. The veteran added, "Whether Taiwan can offer terms that satisfy Trump still depends on TSMC Chairman Wei Zhejia," as quoted in the report.

A major listed firm's CEO told Mnews, "Recently, there were reports that Trump was demanding TSMC acquire a 49% stake in Intel and even invest an additional $400 billion in the US. These are things Wei Zhejia simply can't agree to," as quoted in the Mnews report.

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TSMC’s Role Critical in Taiwan-US Negotiations

However, the two conditions that the US president has set are something that the government cannot decide, as the National Development Fund only holds 6.38% of TSMC's shares, so Wei Zhejia is the key figure who has the power to decide whether TSMC should help Intel and expand its investment in the United States, as reported by Mnews.

Analysts Warn of Political Interference in Private Business

Chen Huiming, a veteran semiconductor analyst and managing partner of Hong Kong's Juxin Capital, highlighted that, "Of course, this is unacceptable. First, the EU has only invested $600 billion in the United States. Why should the future of a private company be jeopardized by politics? TSMC is a national patriot. We must maintain its competitiveness as much as possible. It is a guarantee of Taiwan's security. Thinking long-term, Trump's term may only last three years," as quoted in the report.

While, a senior tech industry analyst explained that, "TSMC's $165 billion investment in the US was already given away. Trump naturally wants more this time. Whether it's agriculture, automobiles, or health foods, even if Taiwan gave up everything, plus purchases of oil, natural gas, aircraft, and arms, it wouldn't compare to the largest trade deficits in semiconductors and ICT," as quoted in the Mnews report.

The analyst added that, "Trump's primary concern is the US-China confrontation, and mastering semiconductor and AI technology is paramount. Setting up factories in the US is just the beginning; the US ultimately needs to control key technologies," as quoted in the report.

FAQs

Why is the US threatening a 20% tariff on Taiwan?
Because Taiwan’s trade deficit with the US is higher than Japan and South Korea, and the US wants more concessions from Taiwan.

What conditions did Trump set for Taiwan to get a 15% tariff?
TSMC must acquire a 49% stake in Intel and invest an additional $400 billion in the US.