The incoming administration of US president-elect Donald Trump is unlikely to impose stiff tariffs on Taiwan’s advanced chips as well as information and communications technology (ICT) products, because they are special and strategic materials the US needs, central bank Governor Yang Chin-long (楊金龍) said yesterday.
“Trump’s trade policies may affect Taiwan’s economy and financial markets through multiple channels... We need to be careful in dealing with monetary policy and foreign exchange,” Yang said at a meeting of the legislature’s Finance Committee in Taipei.
After Trump’s return to the White House in January next year, it might become normal for Taiwan to be on the US’ currency manipulation watch list given the nation’s rising trade surplus with the US in the wake of US-China trade disputes, Yang said.
Photo: Liao Chen-hui, Taipei Times
Taiwan benefited from order transfers during Trump’s first four-year term, the governor said.
As a result, Taiwan met two of the three criteria the US Department of the Treasury uses to judge currency manipulation, namely a trade surplus larger than US$15 billion and a current account surplus in excess of 3 percent of GDP, Yang said.
The governor attributed the trade imbalance to aggressive purchases of advanced chips and ICT products by US tech titans to develop artificial intelligence and new-generation consumer electronic gadgets.
That prompted Yang to doubt Trump would raise tariffs on Taiwan’s exports as they are special and strategic materials the US needs.
“The trend [of advanced chips designed by the US and made in Taiwan] is sustainable, as the US is seeking to stay ahead of China in technology competition,” Yang said.
The central bank and the US Department of the Treasury exchange views on the currency matter twice a year, he said.
The trade friction between the US and China looks to escalate if Trump makes good on his campaign pledge to raise trade barriers with the world and set off another round of global supply chain realignment, Yang said.
Higher tariffs and production base relocation would raise production costs and fuel inflation, especially for firms that rely on imported raw materials, he said.
Such expectations have been reshaping the interest rate trajectory and accounted for the 1.8 percent decline in the New Taiwan dollar against the US dollar following Trump’s electoral win last week, Yang said.
Trade barriers might slow GDP growth in China, Taiwan’s largest export destination, and local firms should pay close attention, he said.
Taiwan could move to reduce trade surpluses with the US through massive procurement of US agricultural, energy and national defense products, Yang said.
Investment in the US by local firms is another solution, the governor said, citing the example of Taiwan Semiconductor Manufacturing Co (台積電).
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS