At the recent Group of Seven summit, Donald Trump declared that the U.S. will command 50% of global semiconductor manufacturing capacity by the end of his term, warning that chipmakers without U.S. facilities could face steep tariffs. In a May 2026 interview, Trump reiterated his claim that Taiwan “stole the U.S. chip industry,” signaling that rebuilding America’s semiconductor sector remains a key objective of his agenda.
Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), noted that semiconductors have consistently been Trump’s primary industrial focus. Even though the U.S. has attracted massive semiconductor investments in recent years, Trump’s drive to reshore the industry has not diminished. Rather, it continues to escalate in tandem with intensifying global tech competition.
Meanwhile, Taiwan’s rapidly widening trade surplus with the U.S. represents another noteworthy shift. According to the U.S. Commerce Department, Taiwan’s trade surplus with the U.S. reached US$71.5 billion in the first four months of 2026. For the first time, Taiwan surpassed mainland China, Mexico, and Vietnam to become the largest source of the U.S. trade deficit, with semiconductor-related products accounting for over 90% of the surplus. While semiconductors have fueled Taiwan’s rapid export growth, they have also thrust the island into the center of the U.S. trade deficit debate. Given the U.S. domestic political environment, massive trade imbalances easily become political lightning rods, suggesting that Washington’s pressure on Taiwan to address the trade imbalance will likely increase.
U.S. Semiconductor Policy Shifts into High Gear; Taiwan Stands at the Crossroads of Industrial and Trade Policy
Director Liu noted that, against this backdrop, Taiwan faces two major challenges. First, as competition in AI, advanced computing, and technology intensifies, U.S. demand for advanced semiconductor manufacturing capacity continues to rise. Taiwan, holding key manufacturing capabilities, naturally becomes a target of intense U.S. focus. Second, a growing trade surplus increases the likelihood that Washington will demand more investment, procurement, market access, and supply chain cooperation.
While Taiwanese semiconductor companies continue to expand their U.S. footprint, Washington’s expectations for industry reshoring remain undiminished. This indicates that the U.S. is not merely pursuing isolated investment projects, but rather a complete semiconductor ecosystem. For the U.S., Taiwan is not just a supply chain partner. It is a critical pillar in driving semiconductor autonomy and supply chain security.
Looking ahead, the focus of U.S.-Taiwan trade relations will gradually expand beyond tariffs and market access to encompass investment, capacity allocation, technology, and supply chain deployment. Director Liu stated that U.S. concerns include the allocation of advanced manufacturing capacity, the scale of supply chain investments in the U.S., and how to help build a more comprehensive American semiconductor ecosystem. Consequently, Taiwan must adopt a longer-term perspective when formulating its U.S. strategy. The key to shaping future bilateral trade relations is no longer just about reducing the trade surplus or responding to specific tariff measures. Rather, it is about how Taiwan can maintain its pivotal role in the global tech supply chain while the U.S. pushes for industry reshoring and supply chain restructuring.
U.S. Pursues a Complete Semiconductor Ecosystem; Taiwan Must Safeguard Global Competitiveness
U.S.-Taiwan trade relations are entering a new phase. Donald Trump’s continued push to reshore semiconductor manufacturing and Taiwan’s surging trade surplus with the U.S. may seem like independent events. However, they reflect a single phenomenon: Taiwan now stands at the intersection of U.S. industrial and trade policies. This not only elevates Taiwan’s importance but also means it will face higher standards of scrutiny and more diverse policy demands.
Consequently, Director Liu emphasized that Taiwan’s future challenge is not simply responding to U.S. demands. Instead, it must translate its growing importance into practical negotiating leverage. Future negotiations could cover a wide range of topics, including investment strategies, capacity allocation, supply chain cooperation, and market access. As Taiwan deepens its cooperation with the U.S. and expands its global footprint, Taiwan must secure its critical position in the global supply chain rather than acting merely as an offshore production base.
Taiwan’s greatest future challenge may not be being ignored by the U.S., but rather finding a balance between meeting U.S. expectations and safeguarding its own interests while under intense scrutiny. Trump’s repeated mentions of semiconductors and Taiwan’s expanding trade surplus underscore the island’s rising importance. However, they also heighten the risk of it being used as a bargaining chip. Transforming industrial advantages into long-term strategic leverage and securing Taiwan’s place in the restructuring of the global tech supply chain will be the most critical task in the coming years.
Source: Da-Nien Liu (July 6, 2026). New Tests for U.S.-Taiwan Trade Relations. United Daily News. https://udn.com/news/story/7340/9591515