WASHINGTON - US President Donald Trump's threat of tariffs on semiconductor chips has complicated Taiwan's bid to remain a global powerhouse in the critical sector and stay onside with key backer Washington, analysts said.
Since taking office last month, Trump has warned of sweeping tariffs against some of his country's biggest trade partners to push companies to shift manufacturing to the United States and reduce its huge trade deficit.
The latest levies announced last week include a 25 percent, or higher, tax on imported chips, which are used in everything from smartphones to missiles.
Taiwan produces more than half of the world's chips and nearly all of the most advanced ones, making the island essential to global supply chains.
The island's economic importance has been described as a "Silicon Shield" against an invasion or blockade by China, which claims it as part of its territory and has threatened to use force to bring it under its control.
"Taiwan's economic security depends heavily on its leadership in semiconductor manufacturing, which it has been using strategically to maintain its importance in global supply chains," said Julien Chaisse, an international trade expert at City University of Hong Kong.
Despite strong bipartisan support in the US Congress for Taiwan, there are fears Trump might not consider the island worth defending if China attacked.
Trump has accused Taiwan of stealing the US chip industry and suggested it should pay the United States for its protection.
Taiwan President Lai Ching-te has already vowed to boost investment in the United States to reduce the trade imbalance and spend more on the island's military, while his government is also considering increasing US natural gas imports.
The pressure from Trump may accelerate the shift of Taiwanese chip production to the United States, said Wayne Lin of Witology Markettrend Research Institute in Taipei, but he added it would take years to build new foundries.
Taiwan's government is still calculating the potential impact of Trump's tariffs and has flagged support for affected industries.
One determining factor would be whether levies are applied only to chips shipped to the United States or also on chips in finished products.