Taipei (AFP) โ Taiwan "will not agree" to making 50 percent of its semiconductors in the United States, the island's lead tariff negotiator said Wednesday, as Washington pressures Taipei to produce more chips on US soil.
Vice Premier Cheng Li-chiun's remarks came after US Secretary of Commerce Howard Lutnick said he had proposed to Taiwan a 50-50 split in chip production.
"I want to clarify that this is the US's idea. Our negotiation team has never made a 50-50 commitment to a chip split," Cheng told reporters in Taipei.
"Please be rest assured that we did not discuss this issue this time, and we will not agree to such a condition," she said.
Cheng spoke after returning from Washington where she said negotiations over US tariffs on Taiwanese shipments "made some progress".
Taiwan is struggling to finalise a tariff deal with Washington, after President Donald Trump's administration imposed a temporary 20 percent levy that has alarmed the island's manufacturers.
Trump has also threatened to put a "fairly substantial tariff" on semiconductors coming into the country.
Soaring demand for AI-related technology has fuelled Taiwan's trade surplus with the United States -- and put it in Trump's crosshairs.
More than 70 percent of the island's exports to the United States are information and communications technology, which includes chips, the cabinet said in a statement Wednesday.
In a bid to avoid the tariffs, Taipei has pledged to increase investment in the United States, buy more of its energy and increase its own defence spending to more than three percent of gross domestic product.
Taiwan produces more than half of the world's semiconductors and nearly all of the high-end ones.
The concentration of chip manufacturing in Taiwan has long been seen as a "silicon shield" protecting it from an invasion or blockade by China, which claims it as part of its territory -- and an incentive for the United States to defend it.
In an interview with NewsNation broadcast over the weekend, Lutnick said having 50 percent of Taiwan's chip production in the United States would ensure "we have the capacity to do what we need to do if we need to do it".
"That has been the conversation we've had with Taiwan, that you have to understand that it's vital for you to have us produce 50 percent," he said.
"Our goal is to get to 40 percent market share, and maybe 50 percent market share, of producing the chips and the wafers, you know the semiconductors we need for American consumption, that's our objective."
This is a perfect example of how unhinged their war on trade deficits really is.
Of course the US has a huge trade deficit with Taiwan. Everyone has a huge trade deficit with Taiwan, because they're basically the only source of one of the most vital components in all of modern manufacturing.
You can't solve that with tariffs. Reducing US reliance on Taiwanese semi-conductors requires long term investment in manufacturing. That's what Biden was trying to do with CHIPS, and he actually made some real headway there. Getting Taiwan to agree to TSMC building a plant in the US was a huge get.
But just slapping tariffs on things just makes the semiconductors you import more expensive. Choosing not to import them isn't an option. Importing them from somewhere else isn't an option.
And on the flip side, you can't increase Taiwanese imports from the US, because what the fuck are they going to import? What, you think they're all going to start driving F-150s? Taiwan doesn't give a fuck about most things the US makes, or if they do, they're already buying it (like SaaS, which is a massive US export sector, but doesn't get counted in Trump's numbers because its not manufacturing so to his addled octogenarian brain it doesn't exist). Taiwan's population is barely more than a twentieth that of the US. They simply don't have enough consumers to meaningfully import on the same scale that they export.
The fact that we're all so dependent on a tiny country under constant threat of invasion for a vital resource is a huge problem, but this is not how you solve it.