At the end of January 2025, the U.S. government revealed its intention to impose duties on imported computer chips, pharmaceuticals, and steel. This move seeks to strengthen the domestic manufacturing sector and tackle trade imbalances. Nonetheless, these actions may substantially impact international trade relations, especially concerning major U.S. partners in Asia.
Effect on Semiconductor Sector
The semiconductor industry is set to be notably impacted by these planned tariffs. Asia leads in worldwide chip production, producing over 80% of the planet’s semiconductors. Prominent firms such as Taiwan Semiconductor Manufacturing Co. (TSMC) and South Korea’s Samsung Electronics along with SK Hynix are key suppliers to the American market. For example, TSMC, recognized as the largest contract chip manufacturer internationally, earns about 70% of its revenue from North American customers, including tech powerhouses like Nvidia and Apple. Although TSMC is investing in a $65 billion production facility in Arizona, most of its output still occurs in Taiwan, which exposes it to the proposed tariffs. In a similar vein, Samsung and SK Hynix, which together hold around 75% of the global DRAM market, might encounter obstacles due to their significant exports to the United States.
Issues in the Pharmaceutical Industry
Pharmaceutical Sector Concerns
Steel Industry and Wider Economic Consequences
Applying tariffs on steel imports aims to boost local steel manufacturing. Nevertheless, these actions may cause higher expenses for industries dependent on steel, like the automotive and construction sectors. Increased input costs could lead to higher prices for consumers and possible disruptions in supply chains. Additionally, these tariffs might strain relationships with principal trading partners and trigger retaliatory actions, further complicating global trade relations.
International Trade Relationships and Possible Retaliation
The suggested tariffs have raised worries among U.S. allies in Asia. Nations such as Taiwan, South Korea, and Japan, crucial to the worldwide supply chains of semiconductors and pharmaceuticals, could face economic difficulties due to diminished competitiveness in the American market. These countries might look to negotiate exemptions or contemplate retaliatory tariffs on U.S. exports, possibly initiating a cycle of trade conflicts.
Consideraciones Económicas Nacionales
Domestic Economic Considerations
While the tariffs aim to promote domestic manufacturing, they could have mixed effects on the U.S. economy. Importers are likely to pass increased costs onto consumers, leading to higher prices for goods such as electronics and medications. Additionally, industries dependent on imported components may face challenges in sourcing materials, potentially hindering production and innovation. Economists caution that such protectionist measures could disrupt supply chains and may not yield the intended benefits of job creation in the targeted industries.
