[News] U.S. Slaps 20% Tariff on Taiwan: Foundries Unscathed, Downstream Burned—Section 232 Looms

With the U.S. announcing Taiwan’s 20% tariff rate at the last minute—set to take effect August 7—the Commercial Times reports limited direct impact on Taiwanese IC design houses and foundries. Still, higher prices triggered by tariffs could dampen end-user demand, the report warns.

However, according to Economic Daily News, since the current tariff covers only 25% of Taiwan’s U.S. exports, the upcoming Section 232 semiconductor ruling—expected within a week—could be even more critical.

Commercial Times points out that the new reciprocal tariff adds pressure on chip trade and could further accelerate the shift of the semiconductor supply chain to the U.S. TSMC has already pledged another $100 billion for its Arizona sites, with GlobalWafers following suit with $4 billion. Yet despite these massive moves, Taiwan has still struggled to secure better terms, the report notes.

Though lower than the initially proposed 32%, the 20% rate—revealed in a White House executive order signed by President Trump—puts Taiwan on par with Vietnam, Sri Lanka, and Bangladesh. In contrast, Japan, South Korea and the EU secured more favorable rates at 15% through investment commitments.

Taiwan’s Next Focus: Semiconductor Section 232 Probe

The Economic Daily News highlights that, while the newly announced 20% tariff grabs attention, the upcoming Section 232 ruling on semiconductors—expected within a week—could have an even bigger impact on Taiwan. For now, key products like semiconductors, servers, pharmaceutical ingredients, critical components, minerals, and chemical materials remain exempt from the new tariff.

According to the Economic Daily News, citing analysts, the current tariff rate affects only 25.2% of Taiwan’s exports to the U.S. Key products like graphics cards and server parts (47.6%), servers (25.9%), laptops (1.2%), PC components (8.2%), ICs (6.8%), mobile phones (4.1%), storage media (1.7%), and pharmaceuticals (0.7%) are all excluded from the hike, the report adds. In short, this move seems more like a prelude to tougher Taiwan-U.S. tariff talks ahead.

As Reuters previously reported, U.S. Commerce Secretary Howard Lutnick revealed last Sunday that the Trump administration will unveil the results of a national security probe into semiconductor imports in two weeks.

Thus, the Economic Daily News suggests that once Section 232 kicks in, the real question will be whether Taiwan can secure Most-Favored Nation (MFN) treatment for its chips and related exports—on par with countries like South Korea or the EU—through ongoing trade talks.

Nikkei, citing Ryosei Akazawa, Japan’s top tariff negotiator, notes that Japan is pushing for a 15% U.S. chip tariff rate—matching the EU’s level

As the Economic Daily News report highlights, after the investigation results are released, the president has 90 days to decide whether to impose tariffs. Following that, there would be a notice period before the new rates take effect. This means if the Trump administration announces the probe results in early August and moves quickly ahead, new semiconductor tariffs could come into force as soon as mid-September to early October, the report notes.

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(Photo credit: The White House’s X)