Analysts warn that US President Donald Trump’s proposed tariffs on Taiwanese and other foreign semiconductors, which could rise by up to 100%, may backfire.

Taiwanese macroeconomist Henry Wu pointed out that these tariffs could increase costs for US consumers, as producers may pass on the added expenses, contributing to inflation.

Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation, raised concerns concerns that  Taiwanese companies might shift production to other countries, potentially sparking a “global, cross-sector tariff war.”

This could harm US consumers, technology firms, and diplomatic relations with Taiwan.

The aim is to encourage domestic chip production, but the proposal has faced criticism from analysts citing possible negative economic effects.

Lien Hsien-ming, president of the Chung-Hua Institution for Economic Research, also suggested allowing the country’s currency to appreciate to address trade imbalances.

Trump’s proposal follows earlier tariffs on imports from Mexico, Canada, and China. These four countries, along with Taiwan, are key semiconductor producer with significant US trade deficit.