Imagine the United States as a giant store selling cellphones, computers, and cars. To create these products, it needs “magic chips” (semiconductors) that are mostly produced in Asia, especially in Taiwan. This raises concerns for the government because if any issues arise in that area (like a potential Chinese invasion), the store will run out of chips and be unable to sell anything.
What is Trump proposing?
A “toll” of 100% on all chips entering the store from abroad. In other words, if a chip costs $10, upon entering the U.S., it would be taxed an additional $10. That’s double the price! However, there are important exceptions:
🔹 If a company manufactures its chips WITHIN the store (the U.S.), it doesn’t pay the toll.
🔹 If it promises to build factories there soon, it also gets a pass.
Why is he doing this?
To force companies (like Apple, Nvidia, or TSMC) to relocate their chip factories to the U.S. This way:
1️⃣ The U.S. produces its own chips (national security).
2️⃣ It creates local jobs (economic benefit).
3️⃣ It reduces dependence on Asia (avoiding geopolitical risks).
For example, with apples 🍎:
– Apple: Announced it will invest $100 billion to manufacture in the U.S. That’s why Trump says, “They won’t pay the toll.”
– TSMC (Taiwan): If it continues to bring chips from Asia, it will have to pay the extra 100%… unless it builds factories in the U.S. (which it has already begun to do).
Problems and concerns:
⚠️ Product prices will rise: If companies pay tolls, they will increase the prices of phones, cars, and appliances.
⚠️ What does “made in the U.S.A.” mean? Trump hasn’t clarified how much a company needs to produce there to avoid the toll.
⚠️ Strategic risk: Experts worry that the exemptions will maintain the dependency on Taiwan. If China invades the island, the U.S. could still face problems.
Who wins and who loses?
✅ Winners: Companies like Apple, Nvidia, or TSMC that have already committed to investing in the U.S. (they escape the toll).
❌ Losers: Companies that continue to import chips from Asia (they’ll pay dearly).
❓ Consumers: They might pay more for technology if companies pass on the toll costs.
In summary:
Trump uses the threat of high taxes as a hammer to force companies to produce chips in the U.S. It’s a risky move: it may bring factories… or increase product prices without solving the dependency on Taiwan. Next week, we will learn more details.