Ex- Tech Titan Sounds Alarm on Tariff Fallout

Since 2025 started, a prominent theme has shaped the economy and significantly affected numerous sectors: the tariffs levied against Canada, Mexico, and China.

President Donald Trump assured that upon winning the election, he would swiftly introduce tariffs, which he indeed accomplished. Nonetheless, his assertions that these tariffs would boost economic expansion haven’t held up, with rising costs for consumer products and notable declines in certain stock values.

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One rationale behind Trump’s choice to impose tariffs on numerous sectors is that these measures would encourage businesses to initiate or increase production within the U.S., consequently generating additional employment opportunities for American workers.

Nevertheless, some specialists remain unconvinced about the effectiveness of Trump’s strategy to revitalize American manufacturing. A prominent figure from the technology sector has pointed out a significant issue concerning an emerging industry.

Trump's tariff proposal fails to consider a crucial aspect for technology firms.

With tariffs continuing to weigh down financial markets, uncertainty remains elevated, causing many investors to feel uneasy. In recent months, some of the leading technology stocks have also faced challenges due to these changing economic conditions, sparking worries about an impending bear market.

Trump boasted about a tariff success earlier this year when Taiwan Semiconductor Manufacturing Company ( TSM ) committed to invest $100 billion in establishing semiconductor fabrication facilities within the U.S. Considering the firm's leading position in the AI chip sector, this decision probably appeared as an early victory for boosting employment in America.

Connected: Significant tariff ruling might heavily affect a leading semiconductor company

One technology executive with extensive experience in chip manufacturing suggests that Trump might have celebrated too soon. Pat Gelsinger, who formerly served as the CEO of Intel, has indicated this viewpoint. ( INTC ) a former venture capitalist, recently talked about what he believes could be a potential weakness in the U.S. tariff approach.

According to Gelsinger, merely increasing production within the U.S. will not genuinely rejuvenate the country’s semiconductor sector, contrary to what Trump aims for. He believes that for this revival to occur, businesses must establish domestic facilities and engage in the cutting-edge research and development (R&D) that propels the field forward.

If R&D isn't based in the U.S., then semiconductor leadership won't be either," he asserted. "TSMC conducts all of its R&D operations in Taiwan, and they haven't indicated any plans to shift this.

According to additional reports, this situation doesn't appear ready for alteration anytime soon. Despite the Trump administration's significant reliance on TSMC over the past few months, the firm’s executives do not seem particularly concerned.

• A number of AI executives are contemplating an agreement that might rescue Intel.
• Microsoft steps up efforts to advocate for significant technology policy reform.
• Tesla handles customers quite distinctively in China compared to how they do in the U.S.

According to the Financial Times "TSMC has stated that the sole development efforts they intend to undertake in the U.S. will focus on refining technologies currently in production, with their primary research and development activities staying based in Taiwan," underscoring their commitment to chip manufacturing in the United States remains exclusive to this area.

Can tariffs ever assist in rejuvenating American manufacturing?

As GudangMovies21 As reported earlier this month, Trump has emphasized his commitment to aiding the U.S. in achieving supremacy in the AI chip production sector. Nonetheless, Gelsinger’s comments bring up a crucial point that appears to have been mostly ignored: might constructing additional chips within the country alone suffice?

Experts raise concerns over risky proposal to rescue Intel

Gelsinger is not the sole authority suggesting that Trump’s strategy might fall short of his expectations. Analyst Fareed Zakaria penned an op-ed where he contended that the "great American manufacturing resurgence" championed by both Trump and VPJD Vance lacks feasibility. According to him, this vision clashes with reality since leading global economies today are predominantly driven by service sectors rather than manufacturing industries.

"The attempt to rejuvenate manufacturing through protective measures goes against fundamental economic principles. In a free-market system, individuals and nations are compelled to focus on activities where they have the greatest proficiency," he pointed out.

Even with these impending issues, Gelsinger maintains that the U.S. retains "a global advantage in numerous cutting-edge technologies." Nevertheless, should genuine innovation stemming from real research and development be lacking, the American economy could still falter, despite potential short-term benefits of bringing manufacturing roles back through corporations such as TSMC.

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