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Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

The author is the author of “The War of Chips”

President Donald Trump recently announced that the United States government will look at semiconductor and the entire electronics supply chain.

According to trade data, the United States imports about $ 30 billion in chips annually, to a large extent from Southeast Asia. Will customs duties lead companies to replace these imports with localities made? Not necessarily. The United States has no intensive assembly capabilities and mobilization in the field of employment that has been implemented abroad to Asia since the 1960s.

For this reason, if the United States imposes a tariff on semiconductors, there is an opportunity to respond to companies by making more manufacturing abroad to compensate for the increasing costs. Instead of importing chips and placing them in locally manufactured devices or cars, the suppliers may transfer the entire operation abroad. These final products will still face a tariff, but at least it will be low -cost manufacturing.

Most chips are already in the United States as parts of other devices. To capture this trade, Washington is considering a more dramatic procedure, and imposing the so -called tariffs on Semiconductor. This means adding the value of external chips inside the device and imposing a tariff accordingly.

Such an approach fits the multinational nature of modern supply chains. The iPhone may be assembled in China, but most of the main components of another place. There is a precedent here in WatchesWhere the customs tariff rate is calculated based on ingredients such as batteries and wrist tapes.

The Biden Administration previously looked at a tariff composed of Chinese chips, before retreating, concerned about the complexity. After imposing a tariff composed on China chips – which produce Less than 3 percent of chips In American supply chains – much easier than imposing definitions on all foreign chips.

There is simply no alternative to the amount and quality of the chips currently produced in Taiwan and South Korea. It takes years to build new chips. component tariff Thus, the system on all foreign makers will act as a significant tax increase on electronics.

All this raises the question: What are the problems that you will try to solve on semiconductor solutions?

For example, there is widespread support for restricting the use of Chinese semiconductors in the United States. The imposition of a tariff composed of Chinese chips would achieve this goal at a limited cost. However, the Trump administration’s ambitions are wider than the restructuring of trade only with China.

What about the reformulation of manufacturing? Certainly imposing constituting definitions in Taiwan will provide an incentive to lead the TSMC chips to continue American investments manufacturing. But building chip plants takes time. Unless the tariffs are done in stages over the years, the additional cost that will add it to the goods sold in the United States can help pushing the country’s volatile economy already to recession.

Moreover, the Trump mixture of threats and making deals may already cause a diversification effort to double its diversification efforts. TSMC now says it aims to produce it 30 percent of the advanced 2nm chips In Arizona, when all the new Burundian armed forces are completed.

Some administration officials aspire to a broader goal: self -sufficiency. But the opposite of all the efficiency of globalization will come at an exciting cost and include deep contradictions. Some critical pieces of chips are produced by one company in Japan or the Netherlands. Adding the customs tariff to these – as the administration’s investigation – will make the manufacture of chips more expensive and undermine the American competitiveness. The main American chip makers will be among the victims of a large -scale chip tariff.

That is why the administration should focus on china’s chips, which are Large and uniquely dispersed. Other main chips, such as Japan, South Korea, Taiwan and Europe, have similar policies for the United States. One of the results of the investigation can be a sectoral deal with these countries on chips and AI-for example, obligating the participants to get rid of unpleasant barriers and continue to build various supply chains.

Wide -widespread definitions will not achieve this. The most successful companies in America rely heavily on chips. Artificial intelligence aspirations will require a greater computing capacity. Self -sufficiency can only be achieved in the amazing cost. It is better to build a global chips industry that can produce semiconductors not only reliably, but also efficiently.