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An aerial photo shows the Kumamoto factory of Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the largest semiconductor contract manufacturer, in Kikuyo Town, Kumamoto Prefecture, Japan, on March 14, 2025.
Trump prepares to slap tariffs on semiconductors and pharma
The topsy-turvy-tariff tale continued to swing this week, as the Trump administration advanced a plan on Monday that could result in new levies on semiconductors and pharmaceuticals. The news came days after US President Donald Trump announced that smartphones would be exempt from the 145% duty that he had slapped on China.
Officially, the plan involves a first step of investigating the national security implications of importing pharma and semiconductors. The next step would be to invoke Section 232 of the 1962 Trade Expansion Act, which allows a president to impose tariffs in the interests of protecting national security. As such, the means for this latest slate of levies would be different from the widescale duties announced on “liberation day.”
Countries affected. The United States relies heavily on Taiwan in particular for semiconductors — one plant there crafts 92% of the world’s advanced chips. As for pharmaceuticals, the US imports many from China, Ireland, and India.
All that and a bag of CHIPS. Former President Joe Biden tried to spark the US’s own semiconductor industry with the 2022 CHIPS and Science Act, which allocated $53 billion for domestic semiconductor manufacturing. Trump said last month he wanted to “get rid of” the CHIPS Act, yet his more recent actions suggest he’s interested in leveraging the law to further his plan to reduce US reliance on foreign chips.A giant screen in Beijing shows news footage about the People's Liberation Army (PLA) joint army, navy, air and rocket forces drills around Taiwan on April 1, 2025.
China conducts massive military drills around Taiwan.
China on Tuesday conducted one of the largest military drills to date in the waters and skies around Taiwan.
Beijing said the operation — in which dozens of aircraft and warships breached Taiwan’s de facto boundaries — was a dry run for “seizing comprehensive control” of the self-governing island.
The backstory: The island has ruled itself for decades, but Beijing views it as part of China, and President Xi Jinping has promised to reintegrate it — by force if need be. The US nominally recognizes China’s claims but, in practice, provides substantial security support to the island.
Why now? Taiwan’s staunchly pro-independence president Lai Ching-te, who took office last May, has, from Beijing’s perspective, gotten too mouthy, calling China a “foreign hostile force” and bolstering the island’s defense capabilities. Beijing called him a “a parasite” and blasted his “pro-independence provocations.” (Read more about him here.)
The US angle. Trump has signaled he’ll focus on countering China in Asia, but also that he expects Taiwan to shoulder a bigger share of its own defense burden. Beijing could be testing the waters, so to speak, not only around Taiwan but around the White House as well.
“The US was the secondary audience of the military exercises,” says Ava Shen, a China analyst at Eurasia Group. “The Chinese military announcement of the exercises also had an English version, which suggests China wanted to express its opposition to US continued support for Taiwan.”
U.S. President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.
Trump's China policy risks allies
What is President Donald Trump’s strategy on China? On the one hand, he slapped additional 10% tariffs on Chinese goods and is considering$1 million fees on Chinese-built vessels entering US ports. On the other, Washington and Beijing are reportedly discussing a cozy-sounding“birthday summit” between Trump and Chinese President Xi Jinping to talk trade in June. It’s enough to give investors whiplash – and make neighboring nations nervous.
And they may have good reason. Last week, Trump issued an“advance warning” to long-time allies Japan and South Korea that he is not prepared to defend them against Chinese aggression unless they make economic concessions. He complained that the American security treaty with Japanis nonreciprocal and claimed that “South Korea’s average tariff is four times higher” than that of the US.
But Trump was referencing South Korea’s Most Favored Nations tariff of 13.4%, which does not apply to most goods traded between the two countries since they signed a free trade deal in 2012. The actual tariff rate charged by South Korea on US goods is 0.79%, leading Seoul to offer to resolve any “misunderstanding” about the real charge.
Meanwhile, China’s talking tough. The Chinese defense ministry recently stated that it will“tighten the noose” around Taiwan if its pro-independence movements escalate. This signals that China will continue to use military gray-zone coercion against Taiwan to deter moves toward – or remarks about – independence, according to Eurasia Group regional expert Ava Shen. Beijing has also vowed to fight a tariff war with the US “to the bitter end” and is busily tariffing other nations, such as Canada, which sawa 25% tariff imposed on seafood, including important lobster exports, as of March 20.
Taiwan's flag with a semiconductor.
Has US opened the door to Taiwanese independence?
The US State Department last week scrubbed a statement from its website that said it doesn’t support Taiwan’s independence, sparking fury in China, which called on the United States to reinstate the message. Taiwan Foreign Minister Lin Chia-lungappreciated the removal.
This is the second time in three years that the US agency has removed this message from its website. The Biden administration cut it in May 2022 but restored it a few weeks later under pressure from China.
A spokesperson for the US State Department said that the United States maintains its official “one China” policy, which specifies that the US only has formal ties with China and doesn’t take any position on Taiwanese independence.
The reality is a little more ambiguous, almost by definition. The United States maintains unofficial diplomatic relations with Taiwan, and the pair have built a close trading relationship. In 2022, then-US President Joe Biden went a step further, pledging to defend the island nation if the Chinese invaded.
US-China relations have been simmering in recent years, across both Democratic and Republican administrations. US Secretary of State Marco Rubio has repeatedly warned of threats from China, calling the Asian juggernaut “the most potent and dangerous near-peer adversary this nation has ever faced."
The Trump administration’s relationship with Taiwan isn’t perfect, either. US President Donald Trumpcomplained last week that the nation, which produces more than 90% of the world’s semiconductors, has taken the industry away from the United States. In an apparent effort to appease the new US leader, Taiwan said it would increase its investment in the United States, while also spending more on defense.
What the website change means for the United States’ position on Taiwan’s sovereignty remains unclear. Rubio has said that the US won’t support Taiwanese independence, though this removal appears to put the United States a step closer in that direction.
“It’s not unthinkable,” says Eurasia Group’s Jeremy Chan, “that Trump’s team may be withholding a statement of not supporting ‘Taiwanese independence’ to build leverage for future negotiations with Beijing.”
Marco Rubio speaks after he is sworn in as Secretary of State by U.S. Vice President JD Vance at the Eisenhower Executive Office Building in Washington, on Jan. 21, 2025.
Tough talk on Taiwan
US Secretary of State Marco Rubio clashed with Chinese Foreign Minister Wang Yi in their first phone call on Friday over the independence of Taiwan, according to State Department spokesperson Tammy Bruce. During the conversation, Wang reaffirmed China’s position that the island nation is part of China and reportedly told Rubio “I hope you will act accordingly,” a Chinese phrase usually employed by a superior warning a student or employee to behave and act responsibly. Rubio has previously called Beijing the top US threat and was twice sanctioned by China in 2020.
And Rubio may have more wars of words with Wang in the future. China is reportedly ramping up efforts to encourage the independence movement on the Japanese island of Okinawa, which hosts 70% of US bases in the region – and is a mere 466 miles from Taiwan.
Chinese state media frequently highlights US military crimes in Okinawa, and Chinese social media propaganda claims most Okinawans favor independence. A poll published in May 2022 showed that only 3% of residents favored full independence, although 48% supported greater autonomy through a federal arrangement with Tokyo.
Reports suggest Beijing also tried but failed to establish an underground police station in Okinawa and plans to establish a Ryukyu Research Centre to remind locals of the island’s status as a former independent empire until it was annexed by Japan in 1609. Beijing has also been conducting a “charm offensive,” stressing Okinawa’s cultural ties to China – and strengthening its claim to the island.Photo illustration of TSMC logos.
Hard Numbers: TSMC’s boom, Gemini’s ambitions, Anduril takes Ohio, Synthesia’s ambitions, TSMC evacuates after earthquake
500 million: Google CEO Sundar Pichai told employees that he wants 500 million people to use the company’s Gemini AI technology by the end of 2025. It’s unclear how many users Gemini currently has, but it reportedly trails OpenAI’s ChatGPT, which boasts 300 million users.
1 billion: Anduril, which makes drones and other AI-powered military systems, plans to build a $1 billion factory in Columbus, Ohio. The company, based in California, said the Ohio facility, called Arsenal-1, will bring 4,000 new jobs to the Buckeye State.
2.1 billion: Synthesia, the British AI avatar company we wrote about in July, raised $180 million in a new funding round last week, raising its valuation to $2.1 billion. CEO Victor Riparbelli told the Financial Times that the UK is “the only country in the European region right now that has a real shot at becoming a top-three AI superpower.”
6.4: Taiwan was hit by a 6.4-magnitude earthquake on Tuesday, causing TSMC to evacuate its facilities. The chipmaker said that all of its staff were safe. It’s unclear how production was interrupted or whether the buildings sustained damage.Assad’s fall, Romania’s canceled election, Trump’s Taiwan approach, and more: Your questions, answered
How did Bashar Assad get driven out of Syria after more than 20 years in power? What are your thoughts on his replacements?
I was surprised that Assad fell. He’s been such an important client for both Iran and Russia for decades and received their immediate support when the rebels began their offensive. But this was a particularly opportune time for the rebels to strike. Assad’s powerful friends were both distracted in other arenas: Iran with Israel (in both Gaza and, more importantly for Iran, Lebanon) and Russia with Ukraine. Interestingly, there is one key throughline connecting the fall of Mosul (Iraq), Kabul (Afghanistan), and Damascus (Syria) — all three were held by conscript armies that were fed, equipped, and trained by corrupt regimes … and when attacked by fierce radical groups fled as quickly as they could.
On its face, the fall of one of the world’s most oppressive dictators should be good news. Assad’s war against his own people led to the deaths of over 500,000 Syrians and millions of refugees fleeing into Turkey and from there to Europe. But I’m not yet confident that what’s replacing his regime will be much better. The Turkish-backed militants in charge are Hayat Tahrir al-Sham, or HTS, a former al-Qaida affiliate in Syria that formally cut ties with the terrorists but is still (as of now) labeled a terrorist organization by the United States and NATO. Turkey wasn’t all in on removing Assad (at first). If the regime change goes well (a big if), the real winner here will be Turkey, with Recep Tayyip Erdoğan sending millions of Syrian refugees back home, becoming the main influence on strategically important Syria, and leading the fight against the Islamic State. This would land Erdoğan in Donald Trump’s good graces if it leads to a withdrawal of American troops.
HTS is clearly serious about establishing itself as the new, legitimate government — and a policy (for now) of relative moderation and tolerance toward other groups in the country is making that easier. But there are still so many unknowns and reasons that this can go terribly wrong.
Can Romania just cancel an election?
The constitutional court decided it’s “better to ask for forgiveness than permission.” After a massive far-right influence campaign by external (well … Russian) forces on TikTok and other social platforms was uncovered, Romania became the first democracy to ever cancel an election because of a disinformation campaign. This move will land the country in hot water regardless of the results of the rescheduled election. The court is viewed as highly politicized, so the decision will ultimately undermine it and whoever the future president may be – unless the far-right fringe candidate is allowed to run, and win, again.
How could President Trump’s plan to negotiate a ceasefire in Ukraine on “day one” impact China’s approach to Taiwan?
Whether China will push to undermine the cross-strait status quo during Trump’s second term is still up for debate. But Trump’s transactional approach to the war in Ukraine won’t affect China’s approach to Taiwan, at least in the near term. Beijing is still several years away from being able to credibly launch an invasion and take over the self-governing democracy. For now, China’s leaders are much more focused on regaining their own economic footing. That said, President-elect Trump’s interest in defending an island thousands of miles from the United States (and incredibly close to mainland China) is questionable at best. Many of his advisors care a great deal about Taiwanese sovereignty as a matter of US national security and longstanding American values, but Trump himself is much more interested in the country’s bilateral trade balance with the US.
What does Russia after Putin realistically look like?
If Vladimir Putin dies tomorrow, don’t expect a seismic shift at the Kremlin. Far more likely, his replacement would be another strongly anti-Western, nationalist leader who would fill the vacuum left by Putin’s departure. Such a successor would likely be more risk-averse, having to derive legitimacy and maintain power through the support of the country’s military, intelligence, and security leaders. It’s hard to imagine a dramatic shift in Russia’s geopolitical orientation when most of the country feels like the United States and “the West” have been out to squash their country’s power for decades.
Could a multi-party proportional representation system fix American politics?
America’s two-party system provides unique challenges for government representation by fostering an “us vs. them” tribalist sentiment, dividing the country into only two camps. It would be harder to immediately brand the opposing party as “the enemy of the state” if Americans had more choices. So, a shift to a multi-party system would allow a broader spectrum of ideologies into DC, and across the country, that would more closely reflect the diversity of the country’s population as a whole, which I think would be a constructive development. That said, it's hard to see how we could ever get from here to there given the stronghold on American politics (and the insane amount of funding) that the current duopoly has.
Why do you always defend the United Nations?
Some may find it controversial, but I’m proud of the United Nations. A truly global institution created by the United States out of the rubble of World War II, the UN charter reflects the very best of American values. As an institution, the UN no doubt has problems. The Security Council (and its veto powers) reflects a geopolitical order that no longer exists, lacks representation, and is accordingly broken. In the General Assembly, each country (no matter how small) has one vote but without enforcement power is generally weak and ineffective. Countries vote and veto in ways many of us wish they didn’t (but you should blame those countries, not the UN, for that).
What gets lost in the critiques of the bureaucracy of the United Nations is the amount of good that the organization does on a global scale, and with limited expenses (which, by the way, is where most of American funding for the United Nations is spent). The World Health Organization, World Food Organization, UNICEF, and other UN arms are systematically looking out for the world’s poorest and most vulnerable in ways most singular countries couldn’t be bothered to do alone.
Today, the world is heading to a post-carbon energy future, and that’s in no small part due to the architecture set up by the United Nations. Plus, new initiatives like the creation of a global framework for artificial intelligence (which I’ve been happy to be a part of) signal more positive developments are still to come on the only stage where every country in the world can have a voice.
What is on your radar over the next 24 months and not being discussed enough?
While there’s constant talk about artificial intelligence impacting our daily lives, the deployment of large-scale AI applications to an individual’s every dataset is not being discussed nearly enough. Personalized decisions or predictions based on human behavior patterns ascribed in large datasets are coming our way shortly. Before you know it, we will all have tools that will change humanity as we know it — in productive ways and post-human ways.
Where do you get your news, and what news sources do you trust?
As you might expect, the folks at Eurasia Group and GZERO Media act as my North Star when news breaks. With about 250 brilliant employees scattered across the globe working tirelessly to understand the inner workings of their areas of expertise, they bring priceless insight into what’s going on in the world on any given day. More broadly, it’s helpful for people to look outside their bubbles and read news coverage from outside their country of origin. For me, the Canadians (CBC), Germans (DW), Japanese (NHK), Arabs (Al Jazeera, etc.), and others cover the world in a much more effective way than the coverage we get from one hour of insular news coverage on cable television (or even from sitting down with the New York Times or Wall Street Journal).
What are your thoughts on pineapple on pizza?
Well, that depends. I’ll allow pineapple if there’s also ham and something spicy on top like jalapenos or chili flakes. Even then, I can probably think of 20 other things that I’d rather have as a pizza topping. Still, pineapple is preferable to cuttlefish – a Japanese fan favorite.
Are you hiring?
Eurasia Group is always looking for new talent – not just in our New York office but around the world. I am not personally involved in hiring, though, which is probably for the best. Thankfully we have a CEO and management team who make running the firm look easy. We’d be nowhere near as successful without them. Left to my own devices, I might run us into the ground. Ask anyone at Eurasia Group, they’ll totally agree with me.Flags of Taiwan and the US.
The US tells TSMC to cut off China
The US Department of Commerce ordered Taiwan Semiconductor Manufacturing Company to stop shipping advanced chips to Chinese customers starting yesterday, Monday, Nov. 11. The government sent a letter to TSMC specifying that this restriction applies to all chips that are seven nanometers or smaller, which can be used to power artificial intelligence models.
Just weeks ago, TSMC notified the Commerce Department that it found that chips it produced were used inside of a Huawei processor. Huawei is a Chinese tech giant subject to stringent US trade restrictions. In response, TSMC cut off Sophgo, a Chinese chip designer that used its fabrication facilities to make the Huawei chip in question.
In Oct. 2022, the Biden administration announced stringent export controls against chips flowing into China. But there wasn’t an all-out ban, explains Xiaomeng Lu, director of Eurasia Group’s geo-technology practice. “US suppliers could seek a sales license to sell to Chinese buyers and sometimes they do get approved — this is the nature of [the] export control regime,” she said. “They are not blank bans.”
But now, TSMC, a strategic corporate partner of the US government, will be barred from all Chinese sales under the new export control rules. “It is possible that TSMC has sought these licenses and offered green lights [to bypass the rules],” Lu said. “Conversely, they have failed to comply with US rules and were caught doing so.”