US President Donald Trump on Saturday signed orders to impose tariffs on Canada, Mexico and China effective from today. Trump decided to slap 25 percent tariffs on goods from Mexico and Canada as well as 10 percent on those coming from China, but would only impose a 10 percent tariff on Canadian energy products, including oil and electricity, White House officials said. Canada and Mexico on Sunday quickly responded with retaliatory tariffs against the US, while countermeasures from China are expected soon.
Trump’s tariff orders were based on the International Economic Emergency Powers Act, which authorizes a US president to manage imports during a national emergency. His cited emergency is the flow of undocumented immigrants and fentanyl into the US. The orders indicate the beginning of potential trade disputes during his second term. Tariffs on the EU are also expected, Trump told reporters in the Oval Office on Friday.
In addition, the US would impose tariffs on computer chips, pharmaceuticals, steel, aluminum and copper imports as soon as the middle of this month, he added, without citing specific countries.
During his first term, Trump had advisers who could help keep him in check, but his new administration is filled with loyalists. Take US secretary of commerce-designate Howard Lutnick, who would oversee tariff and trade policies. At a confirmation hearing on Wednesday last week before the US Senate Committee on Commerce, Science and Transportation, Lutnick said he supported implementing across-the-board tariffs country by country to force trade partners to comply with Trump’s demand and the US’ interests.
Tariffs are one of the few policies Trump has consistently pushed through from his first term to the second term. On the campaign trail last year, he pledged to use tariffs to wield US leverage abroad. Most economists expect his tariff and immigration policies to be at least mildly inflationary, saying that they could stifle US economic growth. They would also trigger tit-for-tat retaliations and reduce global trade, but Trump said he was not concerned about the reaction of financial markets.
Trump has also ordered a review of policies regarding semiconductors, which might include measures against overseas chip production such as in Taiwan and subsidy agreements under the CHIPS and Science Act. Trump earlier suggested that high tariffs on overseas chipmakers could compel companies to build plants in the US.
“They left us, and they went to Taiwan... And we want them to come back, and we don’t want to give them billions of dollars,” he said on Monday last week.
Trump’s top focus in semiconductor policy is pressuring foreign chipmakers into making greater concessions and accelerating investment commitments in the US. Even though Taiwan’s semiconductor manufacturing technology is crucial to helping realize his “America First” policy, any adjustments in US semiconductor policy are likely to affect Taiwan’s industry, information technology exports to the US and subsidies for Taiwan Semiconductor Manufacturing Co to invest in the US.
As strong US allies such as Canada are subject to Trump’s first wave of tariffs, Taiwan should not think that it would be excluded. Trump would not only target semiconductors, but also other Taiwanese products. Therefore, the government must have communication channels in place to engage with the White House as soon as possible and reaffirm Taiwan’s commitment as a friend of the US. Taiwanese firms must also continue diversifying their markets and pursuing further supply chain reallocation, even shifting production to the US, in preparation for potential trade disputes and financial turmoil, while seizing opportunities as they arise.
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