Taiwan says TSMC ‘exempt' from US President Donald Trump's 100% chip tariff
Taiwan Semiconductor Manufacturing Company is the world's largest contract maker of chips and counts Nvidia and Apple among its clients.
'Because Taiwan's main exporter is TSMC, which has factories in the United States, TSMC is exempt,' National Development Council chief Liu Chin-ching told a briefing in parliament.
Some Taiwanese chipmakers 'will be affected' by the 100 percent tariff, but their competitors will also face the same levy, Liu said.
'Taiwan currently holds a leading position in the world and I believe that if the leader and competitors are on the same starting line, the leader will continue to lead,' Liu said.
'This is our current preliminary assessment, but we will continue to observe and propose short-term and medium-term assistance.'
Liu was speaking hours after Trump said at the White House that 'we're going to be putting a very large tariff on chips and semiconductors'.
The level would be '100 percent', Trump told reporters, although he did not offer a timetable for when the new levy would be enacted.
Trump said companies that were 'building in the United States, or have committed to build' would not be charged.
Taiwan is a global powerhouse in semiconductor manufacturing, with more than half of the world's chips and nearly all of the high-end ones made there.
TSMC has been in the crosshairs of Trump, who has accused Taiwan of stealing the US chip industry.
There had been hopes TSMC's plan to invest an additional US$100 billion in the United States would shield Taiwan from new tariffs.
Taiwan has also pledged to increase investment in the United States, purchase more US energy and boost defence spending to more than three percent of GDP in a bid to head off Trump's levies.
Trump has imposed a temporary 20 percent tariff on Taiwan, excluding semiconductors, as US and Taiwanese negotiators try to thrash out a deal.
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Taiwan says TSMC ‘exempt' from US President Donald Trump's 100% chip tariff
Taiwanese chipmaking giant TSMC 'is exempt' from US President Donald Trump's 100 percent tariff on semiconductor chips, Taipei said Thursday. Taiwan Semiconductor Manufacturing Company is the world's largest contract maker of chips and counts Nvidia and Apple among its clients. 'Because Taiwan's main exporter is TSMC, which has factories in the United States, TSMC is exempt,' National Development Council chief Liu Chin-ching told a briefing in parliament. Some Taiwanese chipmakers 'will be affected' by the 100 percent tariff, but their competitors will also face the same levy, Liu said. 'Taiwan currently holds a leading position in the world and I believe that if the leader and competitors are on the same starting line, the leader will continue to lead,' Liu said. 'This is our current preliminary assessment, but we will continue to observe and propose short-term and medium-term assistance.' Liu was speaking hours after Trump said at the White House that 'we're going to be putting a very large tariff on chips and semiconductors'. The level would be '100 percent', Trump told reporters, although he did not offer a timetable for when the new levy would be enacted. Trump said companies that were 'building in the United States, or have committed to build' would not be charged. Taiwan is a global powerhouse in semiconductor manufacturing, with more than half of the world's chips and nearly all of the high-end ones made there. TSMC has been in the crosshairs of Trump, who has accused Taiwan of stealing the US chip industry. There had been hopes TSMC's plan to invest an additional US$100 billion in the United States would shield Taiwan from new tariffs. Taiwan has also pledged to increase investment in the United States, purchase more US energy and boost defence spending to more than three percent of GDP in a bid to head off Trump's levies. Trump has imposed a temporary 20 percent tariff on Taiwan, excluding semiconductors, as US and Taiwanese negotiators try to thrash out a deal.
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Two weeks after he posted 'mission accomplished' on X, Japanese trade negotiator Akazawa Ryosei is back in Washington DC for another round of talks with his US counterparts. The issue is that the Trump administration has given no indication of when – or whether – it will implement the concession that appeared to be Akazawa and Prime Minister Ishiba Shigeru's greatest achievement: a reduction in the US tariff on Japan's automobile exports from 27.5% to 15%. This concession was not mentioned in the White House's fact sheet about the US-Japan agreement or the executive order setting 'reciprocal' tariffs to 15%. With the Ishiba government's insistence that the lack of a written agreement was not only acceptable but even beneficial for Japan, the Ishiba government has nothing to go on other than the word of Akazawa and Ishiba that the US did, in fact, agree to concede on an issue upon which the Trump administration had been highly reluctant to compromise. As Akazawa returns to Washington, the agreement that was initially greeted with acclaim has become a liability for Ishiba, just one more threat to his tenure in office. Ishiba and his cabinet just faced two days of questioning in the Diet over the agreement in which Ishiba conceded that it is difficult to make any agreement with Donald Trump stick; betrayed a certain reluctance to speak directly with Trump; faced questions about the wisdom of concluding an unwritten executive agreement not subject to any legislative approval; and Tamaki Yuichiro, leader of the opposition Democratic Party for the People (DPFP), suggested that if auto tariffs are not reduced to 15%, it would be grounds for a no-confidence motion. However, the questions about the US-Japan trade deal are not just a threat to Ishiba's survival. They increasingly show the damage that the Trump administration's approach to Japan has done to confidence in Tokyo among Japanese elites, echoing the loss of trust in the United States recorded by public opinion polls. One phrase in particular captures the degree to which the mood in Tokyo has shifted since the beginning of the year: unequal treaty. While it is perhaps premature to call its use ubiquitous, in recent days Sanseito leader Kamiya Sohei suggested in parliamentary debate that 'many citizens feel that they have been forced to accept an unequal treaty.' Tamaki said that if the agreement is not renegotiated, it could be called the 'unequal treaty of the Reiwa era.' Meanwhile, in a column at TBS's website on August 1, economist Kumano Hideo wondered whether the deal appeared to be an 'unequal treaty.' Nakanishi Fumiyuki asked a similar question in his column in Nikkan Gendai on August 1. The phrase also appears in a July 31 article in Nikkei Business, referring to popular anger at the 'unequal treaty of the Reiwa era.' This phrase, of course, carries tremendous weight in East Asian history, referring to the treaties imposed by the Western powers on China, Japan and Korea from the First Opium War onward – either following the use of force or, in the case of Japan, under the threat of force – that gave the Western powers extraterritorial privileges, territorial concessions and the opening of treaty ports, and control over tariffs and customs enforcement. Meiji Japan, having inherited 'unequal treaties' signed by the Tokugawa shogunate, was determined to abolish these privileges and succeeded not only in effectively doing so by the mid-1890s but also imposed its own unequal treaties on both Korea and China as it joined the ranks of the imperial powers. China, meanwhile, continued to be subject to its unequal treaties until 1941 (or later, if Hong Kong's status is considered as part of the unequal treaties), serving as an important part of the Chinese Communist Party's narrative about a 'century of humiliation.'1 The phrase remained part of Japan's political rhetoric after 1945, often on the left when discussing postwar treaties with the United States.2 The ease with which the phrase has reappeared voiced by conservative politicians and economists – shortly after Ishiba took an aggressive stance on the campaign trail, warning that Japan 'would not be taken advantage of' in talks with the United States – points to the anger that is roiling barely below the surface of Japanese politics.3 Of course, the use of the phrase 'unequal treaty' suggests that the anger many in Japan are feeling stems from a sense of powerlessness. The negotiations with the Trump administration as a whole have revealed the degree to which the trade talks have seemed more like tributary diplomacy – as discussed here – than reciprocal talks between equals, a point conceded by the reality that Japan is haggling over the size of the additional tariffs its exporters will face, not whether it will face those tariffs at all. It is easier for Tamaki to threaten Ishiba with a no-confidence motion than to fulminate against the US directly.4 As the Tokugawa shogunate discovered, it is the Japanese government that signs the unequal treaties that pays the price, not the powers that impose them. In the near term, the fact that Akazawa has already returned to Washington to verify the agreement that he and Ishiba touted in July is a portentous omen for Ishiba's survival. Even before the upper house elections, Ishiba's right-wing rivals within the Liberal Democratic Party (LDP) were outraged over his handling of relations with the United States. In their eagerness to declare that a deal had been reached, Ishiba and Akazawa played right into their hands, notwithstanding Ishiba's efforts to argue that uncertainty around the agreement means that he has to stay in office. Over the longer term, it is unclear how the anger signified by the phrase 'unequal treaty' influences Japan's approach to the relationship with the United States in practical terms. Ishiba spoke of Japan's pursuing a more independent foreign policy on the campaign trail but was vague on the details. Constitutional Democratic Party (CDP) leader Noda Yoshihiko hammered Ishiba for not doing more to coordinate with the European Union and other like-minded partners, but those efforts have been anemic (and not just because of Ishiba). The far left, of course, has never been satisfied with the security relationship with the United States in the first place. The wild card in this debate is Sanseito. On the one hand, even as Kamiya criticized the deal with Trump as an 'unequal treaty,' he suggested that Ishiba should assuage Trump by following his lead in opposing climate policies, diversity, equity and inclusion (DEI) policies and the UN's sustainable development goals, hardly an assertion of Japan's independence. At the same time, however, Kamiya has hinted at an openness to considering an independent nuclear deterrent, while Saya, his party's most prominent candidate in July, paid no political price when it surfaced that she had called for acquiring nuclear weapons, calling them 'economical.' Sanseito's rise could signify the mainstreaming of not only its anti-immigrant rhetoric but also its embrace of a conservative, often anti-American nationalism that has been pushed to the margins of the LDP and into the pages of conservative journals but has largely not influenced Japan's foreign policymaking, which, particularly since 2012, has gone to extraordinary lengths to keep the United States committed to Japanese and regional security. While the right wing still talks of the need for an alliance with the United States – an essay by Fujii Satoshi in the current issue of Seiron, a right-wing monthly, calls for a 'new autonomy not dependent on the United States' but also for an equal partnership with the United States – it is a less deferential way of thinking about the relationship, less hesitant to embrace military power and remove postwar limits, and, to say the least, less apologetic for Japan's wartime past. The Trump administration, eager to see US allies take more responsibility for their own defense and the regional balance of power, would probably not object to a shift in this direction. Indeed, the Trump administration would likely celebrate it as a victory for its approach to the world. But a Japan that shifted in this direction could prove profoundly destabilizing, through its impact on the regional military balance and threat perceptions, its ability to work diplomatically with like-minded partners and the respect Japan has accumulated through its postwar rejection of the use of force to settle international disputes. To be sure, Sanseito's emergence does not guarantee that Japan will in fact take this path; the public may, among other things, balk at the price tag. Ishiba, meanwhile, may not be alone in seeking a more independent Japan that still seeks to uphold international rules and institutions and pursue constructive relations with China, South Korea, and other Asian countries. Whatever results from Akazawa's ninth round of talks with the Trump administration, the mainstreaming of references to 'unequal treaties' suggests that while the form of US-Japan cooperation remains unchanged – references to the importance of bilateral security cooperation and Japan's investments in the United States – Japanese elites are no longer taking the relationship for granted. As I argued earlier this year, the Trump administration's approach to Japan has laid bare that Japan faces a choice about what kind of foreign policy it should pursue when it can no longer rely on the United States as it once did. The nature of that choice is becoming ever clearer. NOTES: 1 As Pär Kristoffer Cassel writes in Grounds of Judgment, a history of extraterritorial privileges in Japan and China, 'China's 'hundred years of humiliation' forms an integral part of the prevailing nationalist narrative, and the struggle against the semicolonial status of China under the 'unequal treaties' has been enshrined in every constitution since 1954.' 2 To be fair, John Foster Dulles, who negotiated the original US-Japan security treaty that ostensibly restored Japan's sovereignty, said that Japan had accepted 'a voluntary continuation of the Occupation.' 3 Nikkei, incidentally, wrote an article last month discussing the trickiness of translating Ishiba's rhetoric. 4 Indeed, when Ishiba used harsh language about the negotiations during the campaign, Tamaki criticized the prime minister for using language that could undermine Japan's negotiating position in the talks with the US. This article first appeared on the Observing Japan Substack and is republished with permission. Read the original here and become a paid subscriber here.
