1. Fiscal policy
It is proposed to reduce the corporate income tax rate from 21% to 20%, and for companies that manufacture products in the United States, the tax rate will be further reduced to 15%. This policy is designed to incentivize companies to produce and invest in the United States, thereby promoting the return of manufacturing to the United States and enhancing the competitiveness of domestic industries.
2. Monetary policy
Trump's monetary policy favors low interest rates and a weak dollar, which is closely related to his economic policy. He favored tax cuts and expansionary fiscal policy to stimulate economic growth, while raising tariffs to protect domestic industries and reduce the trade deficit. But his avenues for interfering in the Fed's functions are relatively limited; Trump may nominate a new Fed chair in 2026. Expansionary fiscal policies such as Trump's proposed tax cuts and tariff increases could push up inflation, while semiconductor investment is bullish for increased export risks and increased volatility in short-term interest rates and interest rate exchange rates. It will affect the profitability of semiconductor investment and increase the related export risk.
3. Industrial policy
1) It may influence industrial policy in the form of interventions and tariffs, such as attracting multinational companies to return to the United States through territorial taxes, and protecting related industries in the United States by imposing tariffs on specific goods;
2) Establish sovereign wealth and invest in major infrastructure projects such as highways and focus on industries; Vigorously develop traditional energy sources such as oil and gas, financial real estate and construction, and may cancel tax credits for green energy, and reverse some IRA (Inflation Reduction Act)-related subsidies and incentives. It will increase the return of industries such as semiconductor manufacturing in the United States; New energy supports development or slowdown.
4. Trade policy
Trump has proposed a 10%-20% tariff on all U.S. imports and a 60% tariff on China to force TSMC and other overseas companies to move to the United States. It will affect China's semiconductors and terminal vehicles, new energy, and consumer products tariffs or increases.
Trump's focus on the semiconductor-related chip bill is one of his areas of focus, suggesting that the trend of technological decoupling between China and the United States is likely to continue in his second term. Since 2018, the U.S. government has built a complete sanctions regime to curb the rise of Chinese technology, encircling Chinese technology in multiple areas. This trend will not fundamentally change because of the change of president. In terms of operation, unlike the incumbent President Biden's step-by-step high-level dialogue, Trump prefers to have a dialogue directly with President Xi. On the campaign trail, Trump saw technological innovation, especially the revival of high-tech manufacturing in the United States, as a key way to maintain its leading position on China. Especially in the field of artificial intelligence (AI), Trump expressed great "fear" about China's remarkable progress in new energy (mainly photovoltaics, including energy storage, etc.) and new energy vehicles. Therefore, it is foreseeable that in the future, Trump's containment of China's semiconductor industry and terminals such as AI, automobiles, and new energy may continue to escalate.
Trump's expansionary fiscal policies, such as tax cuts, as well as increased tariffs, could push up inflation, which is a positive factor for semiconductor investment, but it also increases the risk of related exports. In addition, these policies may also increase the volatility of short-term interest rates and interest rate exchange rates, further impacting the tailwinds for semiconductor investment and the associated export risks. These changes in economic policy will undoubtedly have a profound impact on the global semiconductor supply chain, especially in the context of increasingly fierce technology competition between China and the United States.
