WASHINGTON: U.S. President Donald Trump announced on January 27 that he plans to impose tariffs on imported computer chips, pharmaceuticals, and steel. The move is aimed at encouraging companies to manufacture more products within the United States.

This announcement follows a series of trade-related measures Trump has proposed recently. He has already stated plans to impose 25 percent tariffs on goods from Canada and Mexico starting February 1, if those countries don’t agree to U.S. demands on border security and other issues.

By targeting computer chips and pharmaceuticals, Trump’s tariff plans could impact key U.S. allies in Asia, such as Taiwan, South Korea, and Japan.

What’s Happening With Chips?

Trump did not provide specifics but said he plans to impose tariffs on imported computer chips.

Asia is the world’s largest producer of semiconductors, accounting for over 80 percent of global chip production, according to the Asian Development Bank. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chipmaker, produces semiconductors for major U.S. companies like Nvidia and Apple. In 2024, TSMC earned 70 percent of its revenue from customers in North America.

While TSMC is building a USD65 billion manufacturing plant in Arizona, most of its production still takes place in Taiwan. These exports to the U.S. could be hit by the proposed tariffs.

What About Memory Chips?

Asian companies also dominate the memory chip market. South Korea’s Samsung Electronics and SK Hynix together control about 75 percent of the global DRAM chip market. These chips are used in electronic devices like computers.

In addition, Samsung, SK Hynix, and Japan’s Kioxia (owned by U.S.-based Bain Capital) have a similar share in the NAND flash chip market.

Samsung is currently investing around USD44 billion in chipmaking facilities in Texas, with support from U.S. government subsidies.

Economic Impact of Tariffs

Chips are a significant export product for South Korea and Taiwan, and the economic impact of tariffs could extend beyond the manufacturers. In 2024, South Korea earned a record USD141.9 billion from semiconductor exports, with USD10.28 billion going to the U.S., according to its Ministry of Trade, Industry, and Energy.

Other Chip-Related Industries

Japan, another U.S. ally, supplies equipment and materials used in chip production. Major companies like Tokyo Electron and Advantest are key players in this sector, but Trump has not mentioned tariffs on these products yet.

Tariffs on Pharmaceuticals

Trump’s plan to impose tariffs on imported pharmaceuticals could impact Japan’s major drug companies, including Takeda, Astellas, Daiichi Sankyo, and Eisai. These companies rely heavily on the U.S. market.

For example, Takeda earned over half of its revenue from the U.S. last year, while Astellas made 41 percent of its revenue from the U.S. It remains unclear how much of their revenue comes from imported products.

In response, Astellas stated that it consistently prepares for geopolitical risks to maintain a stable supply of its products. The company also mentioned its investments in multiple U.S. manufacturing facilities and its plans to continue expanding them.