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Last Friday’s tariff break on electronics like smartphones and laptops is just a breather, as media reports say they could soon face individual tariffs alongside semiconductors. While Trump is expected to reveal more details on chip tariffs Monday, this has sparked alarm in the chip industry, with industry insiders in Taiwan weighing three scenarios, the worst involving duties over 100%, according to the Economic Daily News.
As per CNN, AP and Reuters, U.S. Commerce Secretary Howard Lutnick said Trump plans to roll out “special focus” tariffs on smartphones, computers, and other electronics within a month or two—alongside sector-specific duties on semiconductors and pharmaceuticals. These would be separate from the broader reciprocal tariffs, which pushed levies on Chinese goods up to 125% last week, the reports add.
The Economic Daily News highlights that the U.S. Customs and Border Protection’s temporary tariff exemption for key electronics gives a short break to companies like Apple, Samsung, and hardware from Taiwan and Southeast Asia. But this relief may not last long, as Taiwan’s semiconductor industry is already bracing for three possible tariff scenarios.
Scenario 1: The “Big Reservoir” Model
Sources from Taiwanese chipmakers cited by the report suggest the first scenario could be the so-called “Big Reservoir Model,” where tariffs would be formulated based on the gap between a country’s global chip production and its U.S.-based output.
This model could hit hardest, as the report warns that it would be particularly brutal for companies like TSMC.
The Economic Daily News, citing TSMC’s latest annual report, reveals that the foundry giant’s manufacturing capacity surpassed 16 million 12-inch equivalent wafers in 2023. However, its Arizona fab is expected to produce fewer than 500,000 wafers annually in its early stages. If tariffs are based on this huge production gap, the resulting rates could be sky-high, the report warns.
Scenario 2: Taxing Imported Chips
The second scenario, as per the report, involves directly taxing chips imported to the U.S., which would punish companies assembling products in the U.S. Sources suggest that if tariffs are levied solely on imported chips, it would primarily impact companies that rely on imported chips for assembly in the U.S., such as major EMS providers like Taiwan-headquartered Foxconn and Quanta, or even Supermicro.
However, this could end up punishing those who have increased manufacturing in the U.S., which seems to contradict Trump’s “Made in America” push, the report adds.
Scenario 3: Taxing End Products with Chips Inside
The third scenario, according to the Economic Daily News, involves applying a uniform tariff rate to all finished electronics containing semiconductors—laptops, smartphones, servers, and more. However, the challenge lies in enforcement, as tracing the semiconductor content in each product could be extremely complex, the report suggests.
As all the above measures could lead to major upheavals, sources cited by the report are quietly hoping Trump will “raise the stick high, but swing it light,” opting for a gentler path or carving out exemptions that would soften the blow for most players.
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(Photo credit: TSMC)
