Taiwan's Lai vows more investment in US as chip tariffs loom

The self-ruled island is a global power in the manufacturing of chips, which are used in everything from smartphones to missiles and are a key driver of its economy.

Trump has accused Taiwan of stealing the US chip industry and recently threatened to impose tariffs of up to 100 percent on the product in an effort to drive companies to shift manufacturing to the United States.

Taiwan would “expand investment and procurement in the United States to promote bilateral trade balance”, Lai told reporters after a high-level national security meeting on US trade and tariffs.

Taiwan’s trade surplus with the United States soared about 83 percent to a record US$64.9 billion in 2024.

When it came to Trump’s concerns about Taiwan’s semiconductor industry, Lai said the government would respond “prudently”.

“I would like to emphasise that Taiwan, as the world’s most powerful semiconductor country, has the ability and willingness to cope with the new situation,” Lai said.

Taiwan was willing to work with democratic partners such as the United States to build a “more resilient and diversified semiconductor supply chain”, Lai said.

Taiwan’s TSMC, which is the world’s largest chipmaker, has long been under pressure to move more of its production away from Taiwan, where the bulk of its fabrication plants are located.

TSMC’s new factories overseas include three planned in the United States and one that opened in Japan last year.

To show its determination to protect the island, the government will also prioritise “special budgets” to increase defence spending to more than three percent of gross domestic product, Lai said, compared with about 2.5 percent last year.

Taiwan lives under the constant threat of an attack by China, which claims the island as part of its territory and has threatened to use force to bring it under its control.

While Taiwan has a homegrown defence industry and has been upgrading its equipment, it relies heavily on US arms sales to bolster its security capabilities.

Asked if he was concerned Taiwan could become “a pawn” in US-China competition, Lai said the island was “an indispensable member of the world and the region”.

“We are a player, not a pawn,” he added.