U.S. President Donald Trump plans to impose tariffs on imported computer chips, pharmaceuticals and steel, he said on Monday, to push companies to manufacture more in the United States.
The comments mark the latest in a number of trade-related threats unleashed by Trump in recent days. He has already promised to slap 25% tariffs on imports from Canada and Mexico by Feb. 1 if the two countries don't meet demands on border security and other issues.
By focusing on chips and pharmaceuticals, Trump could squeeze U.S. allies in Asia, including Taiwan, South Korea and Japan.
WHAT'S BEING TARGETED FOR CHIPS?
Trump said he plans to impose tariffs on imported computer chips without providing details.
Asia is the world's biggest chip manufacturing hub, producing more than 80% of semiconductors sold globally, according to the Asian Development Bank.
Taiwan Semiconductor Manufacturing Co. (TSMC) (2330.TW), the world's largest contract chipmaker, makes semiconductors for Nvidia, Apple and other U.S. clients. TSMC generated 70% of its revenue in 2024 from customers based in North America.
While it is building a $65 billion manufacturing facility in Arizona, the bulk of TSMC's production remains in Taiwan, with exports to the U.S. theoretically subject to tariffs.
WHAT ABOUT OTHER CHIPS?
Asian producers also dominate the market for memory chips, with DRAM and NAND flash chips used in electronic devices including computers.
South Korea's Samsung Electronics (005930.KS) and SK Hynix (000660.KS) together control around three quarters of the global DRAM market.
The two companies, plus Japan's Kioxia, which is controlled by U.S. buyout firm Bain Capital, command a similar market share in NAND flash.
Samsung is investing roughly $44 billion in chipmaking facilities in Texas with subsidies from the U.S. government.
WHAT ABOUT THE ECONOMIC HIT?
Chips are a major source of export revenue for South Korea and Taiwan, meaning there's a lot more at stake than just the impact on manufacturers themselves.
South Korea's exports of semiconductors hit a record $141.9 billion in 2024, of which $10.28 billion was to the U.S., according to data released by the Ministry of Trade, Industry and Energy earlier this month.
WHAT ABOUT OTHER CHIP SUPPLY CHAIN COMPANIES?
Japan is a major supplier of chipmaking equipment and materials, all of which, at least for now, appear to have avoided direct mention by Trump. Major equipment companies include Tokyo Electron and Advantest.
WHAT ABOUT PHARMA?
Imposing tariffs on imported pharmaceuticals could weigh on Japan, home of major drugmakers such as Takeda, Astellas, Daiichi Sankyo and Eisai, which has been expecting strong sales growth in the U.S. of its Alzheimer's disease drug Leqembi.
For Takeda, the U.S. market accounted for just over half of its revenue in last financial year, while for Astellas it accounted for 41%. In both cases it wasn't clear how much of the U.S. revenue came from imports.
In a statement, Astellas said it was always preparing for geopolitical risks to ensure a stable supply of products. It also said it had invested in multiple manufacturing sites in the U.S. and would continue to do so.
