President Trump has threatened tariffs on Taiwan and the chip industry. China has signaled it will not let the trade war keep it from the technology it needs.
Even as the United States and China push their economies further apart with escalating tariffs, they share an inescapable challenge. Both depend on Taiwan for semiconductors.
And navigating that reliance could prove to be one of the trickiest policy problems both countries face in their trade war.
China and the United States both view Taiwan’s dominance of the global tech supply chain as a national security risk. In response, they have tried to boost their own capacity to make the chips they need.
But as they come to grips with how difficult it is to replicate the industry at the heart of the global tech supply chain, which Taiwan has built over decades, China and the United States are pursuing diverging approaches to their dependence on the island and its dominant chip maker, Taiwan Semiconductor Manufacturing Company.
In the United States, the Trump administration has initiated a national security investigation into chip imports that could result in tariffs on the industry. Nvidia, the American chipmaker, said Tuesday that it had been told by the government it would now need a license to sell any A.I. chips to China. President Trump has long focused on Taiwan and accused it of stealing business from American companies.
China is taking a different tack.
In a notice last week, a state-backed trade association in China issued guidance that would exempt a significant portion of advanced chips from China’s tariffs on the United States.