President Trump’s New Chip Policies Could Force TSMC to Put U.S. and Taiwan Production on Equal Footing, Or Face a Huge Tariff Shock

President Trump’s latest chip policy proposals could bring massive challenges to TSMC and its global operations, as the U.S. government considers imposing steep tariffs unless companies balance U.S. and overseas semiconductor production equally.

The Trump administration has made it clear that the goal is to reduce reliance on offshore manufacturing and build a more self-sufficient U.S. semiconductor industry. According to a report by the Wall Street Journal, the U.S. government is now demanding a “1:1” ratio for chip production:

Chipmakers would need to manufacture the same number of semiconductors in the U.S. as their customers import from overseas producers. Companies that don’t meet this balance would face tariffs.

Initial tariff figures floated by the administration were as high as 100%, but exemptions were promised for firms that committed to U.S.-based production. Now, however, the new framework threatens companies heavily reliant on overseas fabs, with TSMC standing at the center of the storm.

TSMC’s Taiwan fabs are decades ahead of its U.S. facilities in terms of both scale and process technology. The firm’s American expansion, including massive investments in Arizona, has strengthened its U.S. footprint, but it still lags far behind Taiwan’s production capacity.

• TSMC has announced plans to produce cutting-edge nodes in the U.S., signaling a willingness to pivot, but achieving parity with Taiwan in both output and technological advancement remains a monumental challenge.

• The policy would also require a “relief period”, during which companies could continue to source chips from overseas while waiting for domestic plants to scale up. Failure to transition in time, however, would trigger the proposed tariffs.

The push for U.S.-based production has also created tensions in Taiwan. Some locals fear that TSMC is being transformed into a U.S. foundry, especially if Washington enforces production of the same node technologies in both regions. While core R&D remains in Taiwan, the perception of technological transfer is raising concerns about the island’s long-term role in global chip leadership.

Compounding the issue, TSMC relies on offshore assembly lines - particularly advanced packaging services - for finalizing chips. The Trump administration’s vision for a 100% “Made in USA” supply chain means every step, from design to packaging, would need to be replicated domestically.

If enacted, this policy could represent one of the most significant shifts in the semiconductor supply chain in decades. For TSMC and its partners, balancing U.S. and Taiwan production on equal footing is not only a technological and logistical challenge - it could redefine the geopolitics of chips for years to come.

President Trump’s New Chip Policies Could Force TSMC to Put U.S. and Taiwan Production on Equal Footing, Or Face a Huge Tariff Shock