There’s never a dull moment in the Trump administration, as there has been a pause in tariffs on Canada and Mexico as they negotiate specific issues to remain on good terms. Now, it appears that the Trump administration is turning its focus to Asia, specifically China and, to a lesser degree, Taiwan.
The question becomes, what is the end game Trump is playing, and what does he really want?
A clear pattern in the first Trump administration and this second version is to enter negotiations with high demands and even larger threats that typically result in obvious fallback positions that land somewhere in the middle. Trump starts threatening tariffs because counter-party states have no incentive to negotiate over behavior that they do not wish to change, lacking an incentive to change.
China is a unique case because so much of what Trump has done to date seems to have China as the lingering shadow over everything. Mexico and Canada specifically were about the transshipment of Chinese-made fentanyl or transshipments of goods and related issues. Although details remain murky, Trump’s foreign policy team has focused on ending the Ukraine war in order to dedicate greater U.S. resources to dealing with China. Trump 2.0 recently announced an additional 10 percent tariff on Chinese goods entering the United States, in addition to the 10 percent tariff imposed on China on Feb. 4.
In a recent call with Beijing, there was talk of the 10 percent tariffs where they expressed displeasure, but little else was publicly released about the call. The short answer is that, to date, while we have an increasingly clear picture of the Trump administration’s foreign economic policy objectives, we do not have much clarity on how it intends to proceed with China, which is by design.
Notably, the Trump administration seems to have a clearer picture of its objectives with Taiwan. The administration has officially bandied about the potential of a 25 percent tariff on semiconductors exported from Taiwan to the United States. This has raised real consternation in Taipei, but as with Trump’s negotiating tactics, this seems more designed to extract key concessions.
The previous and current Trump administrations have expressed frustration with allies who benefit from American defense but do not prioritize their defense spending. They are probably looking at methods that can force Taipei to significantly increase defense spending and require them to purchase significant amounts of American-made weapons simultaneously.
However, there is another layer that is actively ongoing. The Trump administration is worried about Taiwan chipmaking in the event of a conflict with China and is looking to diversify that manufacturing risk while bringing some of that capability to the United States. There are ongoing talks between Taiwan Semiconductor Manufacturing Co. (TSMC), Intel, and the U.S. government over various issues, including expanding TSMC production in the United States and buying Intel’s manufacturing business. It is quite likely that TSMC and related chip businesses are key players in the Trump administration tariff decision.
In many ways, like Canada and Mexico, the potential Taiwan tariffs exist in the shadow of Beijing and how the Trump administration appears to be preparing to deal more directly with China. The administration will be better prepared to deal directly with China by addressing these issues first.
The lack of movement on China matters seems designed rather than by accidental omission. All of these issues exist in the shadow of China rather than being independent of China.
