With Donald Trump threatening potentially unprecedented tariffs in his second term as U.S. president, TaiwanPlus talks to Alicia Garcia-Herrero for more on what the consequences a protectionist U.S. could have for the global economy.
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00:00With Donald Trump looking to put high tariffs on China and other countries that he deems
00:05uncooperative in global trade, what kind of consequences could we be looking at in the
00:10entire global economy?
00:12What is going to happen?
00:13I think numbers will be high and some industries will go or some companies, I mean, it will
00:21have massive implications.
00:23But remember what happened in 2018 and 2019, he started carving out the tariffs.
00:30So you know, I exclude this item, I exclude the other item.
00:33So it creates humongous uncertainty for companies, but it's extremely costly for the world because
00:39this is not free trade, this is really about, again, arbitrage, tariffs here, tariffs there.
00:45So it's a massive downward pressure on growth for the world because we know trade is growth
00:53enhancing.
00:54So, yeah.
00:55And the worst, frankly, might not even be China.
01:01The ones that will be affected the most are those who are not ready for this.
01:06Multiple times during his campaign, Donald Trump said falsely that Taiwan stole the United
01:12States chip industry, and he also said that the CHIPS Act was a bad deal, threatening
01:17to kill it entirely.
01:19If Trump were to put high tariffs on Taiwan's chip industry, what kind of consequences could
01:25we see?
01:26The most immediate will be accelerating foreign direct investment, greenfield investment into
01:33the U.S. to produce in the U.S., but at the same time, we also don't know whether the
01:37CHIPS Act will be maintained, whether there will be carrots.
01:43Maybe Trump is, for me, in his world, there are only sticks, there are no carrots.
01:50That's why I think he doesn't think highly of IRA or the CHIPS Act, because those are
01:54carrots.
01:56So maybe if he lifts those carrots, i.e. the subsidies, and it's only about imposing tariffs,
02:02you still go, because tariffs are detrimental if you produce in Taiwan.
02:08In the incidence of high tariffs on Taiwan's advanced semiconductors, what happens to the
02:14global supply chain of semiconductors?
02:17I actually don't think Trump is going to impose tariffs of any relevance to AI chips, because
02:25they are needed, and basically there's no option.
02:28This is the same as I was mentioning batteries or Chinese batteries into the U.S. with Biden.
02:34The tariffs went all the way to, what, 25 percent, not 100.
02:37Why?
02:38Because they need them.
02:39And Trump, at the time, I remember, excluded so many items that were needed, and he will
02:45be told what is needed.
02:47So I'm not too worried about the highest-end chips for Taiwan, but yeah, whatever his legacy,
02:54I mean, they're already suffering, many Taiwanese fabs, because of the Chinese competition,
03:00prices are plummeting of legacy chips.
03:04Those, I think, will face additional problems, especially if tariffs are similar between
03:10Taiwan and the mainland for legacy chips.