Semiconductor Tariffs as Policy Whiplash

Abstract Early signs suggest that Trump may revise the Biden administration's incentive-driven semiconductor policy and instead rely more heavily on tariffs to restore US semiconductor manufacturing. To what extent can semiconductor tariffs serve as a form of policy whiplash to compel foreign companies to relocate their operations? This article argues that while tariffs can influence investment decisions, Trump overstates their effects on fab locations and supply chain diversification. Semiconductor manufacturers weigh a complex set of factors encompassing partners in the supply chain ecosystem, potential regulatory scrutiny, technological trends, and more. Tariffs in and of themselves may not be a determinative factor behind TSMC's recently announced plan to expand its US investment.