Trump Pressures Taiwan on Chips, Tariffs, Defense

Taiwan, a critical global supplier of essential chips and home to the world's most advanced semiconductor ecosystem, views Trump's demand to shift 50% of its chip production to the US as unrealistic, risky, and destabilizing. Chien-Yu Shih, an associate research fellow at the Taipei-based Institute for National Defense and Security Research, states Taiwan's complete semiconductor ecosystem and specialized workforce make such a relocation unfeasible for over a decade, as the US lacks the necessary infrastructure and high-tech labor.

Taiwan Semiconductor Manufacturing Company (TSMC) has committed $65 billion to US facilities in Arizona, but these will not produce the most advanced chips. Beyond chips, Taiwan faces 20% US tariffs, higher than the 15% applied to other US allies, which Shih warns will substantially affect export-dependent sectors like bicycles, textiles, and machine tools, potentially generating dissatisfaction.

Trump also demands Taiwan raise defense spending to 10% of its $884 billion GDP, far exceeding the Lai administration's proposed 3% ($31.1 billion) for next year, though Shih expects it to climb to 5% or more. Experts like Einar Tangen highlight a broader issue of trust, while Shun-wen Wang, a professor at Taiwan’s National University of Kaohsiung, notes Taiwan has little room for hedging given its strategic position and security needs.